Crypto.com delists PayPal PYUSD, Tether USDT in Europe | PaymentsSource

The Crypto.com exchange has suspended purchases of several cryptocurrencies in the European Union as it works to follow stricter regulations for digital assets.

The delisted currencies include Tether’s USDT, PayPal USD, Wrapped Bitcoin (WBTC), Dai (DAI), Pax Dollar (PAX), Pax Gold (PAXG), PayPal USD (PYUSD), Crypto.com Staked ETH (CDCETH), Crypto.com Staked SOL (CDCSOL), Liquid CRO (LCRO) and XSGD. Purchases were halted today, with deposits expected to be discontinued in the next few days. Withdrawals will be available until March 31, the scheduled date for the delisting.

The EU recently passed the Markets in Crypto-Assets Regulation, or MiCA, which creates standard rules for crypto assets covering transparency, disclosure, transaction authorization and supervision. MiCA requires stablecoin issuers to hold at least 60% of their reserve assets in European banks.

Stablecoins are a type of cryptocurrency that are backed by reserves of traditional money such as U.S. dollars, pounds or Euros. The reserves are designed to help the stablecoin’s value match that of a corresponding sovereign currency, thus avoiding the volatility of other cryptocurrencies. That makes stablecoins theoretically a better bet for mainstream payments than other cryptocurrencies.

That has drawn investment from payment technology companies that are eager to sell digital asset payment products to merchants. MiCA potentially lays the groundwork for further regulation in markets that do not have stablecoin-specific laws, including the U.S.

The architects of MiCA and executives from USDC issuer Circle have expressed hope MiCA, and a crypto-friendly Trump administration, will push stablecoin regulations in the U.S. On balance, MiCA should provide regulatory clarity for stablecoins, according to Arvind Siva, head of strategy and operations at Concordium, a cryptocurrency technology company.

“MiCA provides a robust legal framework for stablecoins within the EU,” Siva said, noting financial institutions such as Société Générale have received money transmitter licenses to comply with EU cryptocurrency regulations. Other jurisdictions, like Hong Kong and Singapore, have introduced stablecoin regulations. 

“While the U.S. regulatory environment for stablecoins presently remains somewhat fragmented, our expectation is that this will undergo significant evolution under the Trump administration,” Siva said. 

Tether’s USDT is the largest stablecoin, with a market capitalization of about $140 billion — the total market capitalization of all stablecoins is about $223 billion. Tether has faced several controversies, including a $41 million fine by the U.S. Commodity Futures Trading Commission, which charged Tether with providing misleading information about the traditional currency backing the stablecoin. 

The reserves that back stablecoins have been subject to scrutiny in recent years as political leaders and regulators have pushed issuers to improve disclosures and strengthen audits to demonstrate that stablecoins have full backing from government-issued currency, as opposed to riskier assets such as commercial paper. The MiCA regulations and government initiatives in other countries are also designed to ensure stablecoins can be redeemed in the event of the issuer’s bankruptcy.

PayPal did not comment. PYUSD’s market capitalization is about $440 million, well behind Tether. PayPal has collaborated with cryptocurrency payment company BitPay, gaming firm Xsolla and payment security technology firm BVNK to build scale for PYUSD. 

In an email from Tether’s public relations representative, the firm said it “remains fully committed to the safety, stability, and utility of USDT for its global user base. The dynamics of different markets vary significantly; in Europe, the use cases for stablecoins are very different from the ones of the emerging markets and developing countries where USDT is extremely popular.” Tether said it commends EU regulators for their efforts in establishing a structured framework, as it plays a key role in fostering growth within the sector.

“However, as we have consistently expressed, some aspects of MiCA make the operation of EU-licensed stablecoins more complex and potentially introduce new risks,” Tether said. “It is disappointing to see the rushed actions brought on by statements which do little to clarify the basis for such moves. These changes affect many tokens in the EU market, not only USDT, and we fear that such actions will lead to further risk being placed on consumers in the EU.”