MiCA Restricts Services of Stablecoin Issuers in Europe

The MiCA regulation in Europe has significantly limited the services that stablecoin issuers can offer to institutional clients. According to ESMA's temporary register, only 9 out of the 23 entities authorized under the electronic money token status have received full approval for both EMT issuance and CASP services. The remaining 14 entities cannot store their tokens on behalf of customers without the necessary CASP license and are unable to conduct automatic payment processes for institutional users. Patrick Hansen, Circle's Head of EU Strategy and Policy, noted that most stablecoin issuers in Europe are unable to provide custody services for their tokens on behalf of customers. The situation is less impactful for individual users, but issues arise in the B2B segment due to the lack of custody and transfer service licenses. Companies must complete the notification process under Article 60 of MiCA to launch these services. In major jurisdictions like France and Luxembourg, this process can take anywhere from a few months to a year. Some issuers have started turning to regulated third-party platforms instead of waiting for the process to complete. Circle, the issuer of USDC and EURC, along with Société Générale-Forge, are among the institutions benefiting the most from this situation. Although the euro stablecoin EURØP developed by Schuman Financial has EMT status, it lacks CASP authorization and is leveraging Ripple's MiCA-compliant licenses to provide legal custody and transfer services in 30 European countries. Market participants do not expect this imbalance to change in the short term.

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