EU Regulators Push Stablecoin Compliance with Custody Restriction

The European Securities and Markets Authority (ESMA) has proposed ending EU custody and transfer services for non-compliant stablecoins. This move would remove the option of leaving such tokens with a licensed custodian after their trading pairs disappear.

In its September 30, 2026 response to a review of the EU's Markets in Crypto-Assets regulation (MiCA), ESMA asks the European Commission to prohibit every licensable crypto-asset service involving stablecoins that fail the regulation's applicable requirements. Custody and transfers fall within this list.

This proposal is a step back from ESMA's January 2025 approach, which allowed mere custody and transfer while stopping trading services for non-compliant stablecoins. The new proposal would give compliant tokens a wider advantage in European distribution but does not imply forced conversion or global demand shifts.