ESMA Proposes Blocking Non-Compliant Stablecoins from European Crypto Firms

The European Securities and Markets Authority (ESMA) has proposed that European crypto firms be barred from providing services involving stablecoins that do not comply with the Markets in Crypto-Assets (MiCA) regulations. This includes custody and transfers of non-compliant stablecoins, even if the holder never plans to trade them again.

According to ESMA's submission, the absence of a clear prohibition on providing services for non-compliant stablecoins creates disparities between compliant and non-compliant issuers and allows regulatory arbitrage. The proposal goes beyond ESMA's previous stance, which distinguished between platforms offering non-compliant stablecoins to the public and firms merely holding or transferring them.

Under the proposed rules, compliant stablecoins could retain access to regulated custody and transfer channels that non-compliant tokens lose. Providers would then face a service boundary based on the status of the asset, not merely the provider's license.