Coinbase, the cryptocurrency exchange, has announced it will delist some stablecoins in Europe by the end of the year, as it braces for tougher incoming regulation in the region.

The European Union’s Markets in Crypto-Assets (MiCA) legal framework is due to come into full-force from December, and requires stablecoin issuers to have an e-money licence issued by an EU member state to be able to operate in the bloc.  

Coinbase, the world’s third-largest crypto exchange with over 33 million monthly visitors, has been working quickly to meet the European Union’s regulations, which introduce strict rules around transparency, liquidity, and consumer protection. 

In order to continue operating in the European market, stablecoin issuers must obtain authorisation to act as electronic money institutions, publish whitepapers detailing the key aspects of their tokens, and pass ‘suitability assessments’, ensuring that key individuals are fit to operate within the regulatory framework.

In an emailed statement to Reuters, the company said: “Given our commitment to compliance, we intend to restrict the provision of services to EEA users in connection with stablecoins that do not meet the MiCA requirements by December 30, 2024.”

In November, Coinbase will provide European Economic Area customers with alternatives to switch to regulated issuers, such as Circle’s EURC, tied to the euro at a ratio of 1:1.

Earlier this year, Circle became the first stablecoin issuer to comply with the MiCA regulations, acquiring an Electronic Money Institution (EMI) licence in the hopes of driving mainstream adoption of digital currencies.

Tether, considered the largest issuer of stablecoins, doesn’t yet have the required e-money licence in the EU, telling Coindesk that although it ‘commends’ the EU’s efforts in establishing a legal framework, the MiCA regulations are overly complex and might introduce new risks to both local banking infrastructure and stablecoins themselves.  

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Despite the complexities, Coinbase is apparently taking no risks when it comes to meeting the letter of the law.

That’s partly due to the hefty fine the firm was recently presented with by the UK’s Financial Conduct Authority for breaching a requirement that prevented the firm from offering services to high-risk customers.

The £3,503,546 fine was handed to CB Payments Limited, which acts as a gateway for customers to trade crypto assets via other entities within the Coinbase Group, but was not registered to undertake those activities in the UK.