mica
Is Bitcoin Self-Custody Under Threat in Europe?
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1 day agoon
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adminFor centuries, self-custody has symbolized financial autonomy, enabling individuals to secure their wealth—from gold to cash—without intermediaries. Bitcoin extends this principle into the digital realm, offering a censorship-resistant, decentralized way to hold assets. Yet, upcoming European regulations under the Markets in Crypto-Assets Regulation (MiCA) and the Transfer of Funds Regulation (TFR) threaten to complicate self-custody for Bitcoin users.
A New Regulatory Era
MiCA, adopted in April 2023, aims to regulate crypto-assets comprehensively in the EU. The revised TFR applies the “Travel Rule” to Bitcoin transactions, requiring detailed sender and recipient information for compliance. These changes will come into effect in 2025, making it harder for Europeans to interact with Bitcoin self-custody wallets without cryptographic proof of ownership.
One proposed solution is the “Satoshi Test,” where users verify wallet ownership by sending a small amount of Bitcoin (e.g., one satoshi) from their wallet to the exchange. While simple for existing holders, this process creates a paradox for new users: they need Bitcoin to verify ownership but cannot acquire Bitcoin without passing the test. This “catch-22” risks alienating new adopters, steering them toward custodial solutions that compromise Bitcoin’s ethos of decentralization and financial sovereignty.
Privacy and Security Risks
In an effort to comply with the new regulations, some exchanges are exploring alternatives to the Satoshi Test; These involve using end-to-end encrypted messages signed using the private key to confirm ownership of the wallet cryptographically for example via the WalletConnect Network. This preserves privacy and yet helps institutions to be compliant.
The core ethos of Bitcoin technology and cryptocurrencies is decentralization and privacy. Centralizing sensitive user data not only creates attractive targets for cybercriminals but also contradicts the principles that have driven the adoption of cryptocurrencies. The recent history of data breaches in the financial sector underscores the dangers of storing large amounts of personal data in centralized repositories.
“Not Your Keys, Not Your Coins”
The adage “Not your keys, not your coins” serves as a reminder of Bitcoin’s core philosophy: control over private keys equals control over assets. Users must carefully evaluate exchanges’ self-custody support, as cumbersome processes or centralized data storage undermine Bitcoin’s promise of financial freedom.
The TFR is only the beginning. Future legislation, like the proposed Payment Services Directive 3 (PSD3), signals growing regulatory scrutiny of Bitcoin self-custody. To preserve Bitcoin’s core values, the industry must proactively develop solutions that comply with regulations while protecting user privacy.
This is a pivotal moment for Bitcoin in Europe. Users should advocate for exchanges that prioritize self-custody and privacy-preserving measures. Exchanges, in turn, must innovate to comply with regulations while staying true to Bitcoin’s decentralized principles.
As Europe tightens its regulatory framework, the choices made by Bitcoin users, exchanges, and regulators will determine whether Bitcoin continues to empower individuals or becomes entangled in centralized systems. By championing privacy and self-custody, we can ensure Bitcoin remains a tool for financial sovereignty and freedom.
This is a guest post by Jess Houlgrave. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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mica
Tether ends support for EURT stablecoin amid MiCA compliance
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1 week agoon
November 27, 2024By
adminTether is discontinuing its support for the Euro-pegged stablecoin EURT, and will no longer accept new issuance requests.
The Tether (USDT) issuer notified its community and the broader industry that the company has ended EURT support via a blog post on Nov. 27.
According to the announcement, the decision to halt the minting of the Euro-pegged stablecoin comes amid the industry’s adjustment to the regulatory environment around stablecoins. In particular, Tether has taken this step in response to the European Union’s stablecoin regulation as outlined in the Markets in Crypto-Assets regulation.
MiCA rolled out for stablecoins in June, with full implementation of the comprehensive regulatory regime set for December 30, 2024.
“After careful consideration, we have made the decision to discontinue support for EUR₮. As such, Tether has ceased minting EUR₮, with the last acquisition request processed in 2022, and new EUR₮ issuance requests are no longer accepted,” Tether wrote.
The USDT issuer is choosing to end EURT support “until a more risk-averse framework is in place.” Customers with EURT balances on blockchains have until November 27, 2025, to redeem their holdings.
Tether previously disclosed plans to halt EURT across several chains, including EOS, Omni, Kusama and Algorand. However, this has changed with stringent rules around asset-referenced tokens. Some exchanges announced the delisting of the fiat-backed token this year. They include OKX, Bitstamp and Coinbase.
As the crypto platform takes this step, it notes that its focus will now be on other initiatives. These include Tether’s support for recently launched MiCA-compliant stablecoins USDQ and EURQ.
Tether recently invested in USDQ and EURQ issuer Quantoz Payments, which crypto.news highlighted last week. Tether’s blockchain technology solution Hadron by Tether will power this integration.
The EURT stablecoin was launched in 2016.
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coinbase
Stablecoin usage surged in Q3 as market cap hits $170b: Coinbase
Published
2 months agoon
October 16, 2024By
adminThe third quarter of 2024 saw a surge in stablecoin use and adoption, according to Coinbase’s 4th Quarter Guide to Crypto Markets report with Glassnode.
Stablecoins hit an all-time high market capitalization of nearly $170 billion in Q3 2024, according to the report. This growth occurred alongside the implementation of the European Union’s new Markets in Crypto-Assets regulation, which introduced clearer rules for stablecoin operations.
Stablecoins have become a key tool for users seeking faster, cheaper, and more secure transactions. Their utility in payment systems, including remittances and cross-border transfers, has continued to expand.
Recently, Anthony Pompliano argued that tech innovations outside of crypto could lead to a new era in which stablecoins become the primary transaction medium in a machine-driven economy. This increased adoption reflects the growing role of stablecoins in crypto trading and real-world financial systems.
According to the report, stablecoin volumes have reached nearly $20 trillion year-to-date as of the third quarter, indicating their growing role in the global economy.
Stablecoin and Bitcoin dominance
Stablecoin dominance also increased in Q3 alongside Bitcoin (BTC), with crypto investors gravitating toward what they see as the highest-quality digital assets.
The current BTC cycle closely tracks the 2015-2018 and 2018-2022 cycles, which ended with nearly 2,000% and 600% returns, according to the report.
What is MiCA?
The Markets in Crypto-Assets Regulation is a comprehensive framework enacted by the European Union in June 2023 to regulate the crypto industry across its 27 member countries. It initiates a 12-18 month transition period for implementing rules on anti-money laundering, combating the financing of terrorism and digital asset custody, among others.
MiCA’s impact on stablecoins still remains to be seen, but Tether (USDT) CEO Paolo Ardoino expressed concern that MiCA’s 60% cash reserve requirement for stablecoins could create systemic risks for European banks. He argued that such regulations might exacerbate liquidity issues during large-scale redemptions, potentially leading to bank failures.
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coinbase
Coinbase to delist non-compliant stablecoins for EU clients over MiCA rules
Published
2 months agoon
October 4, 2024By
adminCrypto exchange Coinbase is set to delist unauthorized stablecoins from its European branch by year-end, in response to incoming MiCA regulations.
U.S.-based cryptocurrency exchange Coinbase will remove all non-compliant stablecoins from its European exchange by the end of this year, as the company moves to comply with the European Union’s new crypto regulations, Bloomberg has learned.
The Markets in Crypto-Assets framework, which came into effect in June for stablecoin issuers, requires companies to hold e-money authorization in at least one Europe’s member state. Further regulatory guidelines for exchanges like Coinbase will be enforced starting Dec. 31.
A spokesperson for Coinbase told Bloomberg that the exchange plans to restrict services related to non-compliant stablecoins, including Tether’s (USDT) by Dec. 30. The exchange will provide users with an update in November, outlining options to convert their holdings to alternatives such as Circle’s USD Coin (USDC).
In early July, French blockchain analytics firm Kaiko said in a research note that Circle has benefited from the MiCA regulations, with its stablecoins experiencing significant increases in daily trading volumes following the introduction of the new requirements.
Still, industry leaders have expressed concerns about the regulations. For instance, Tether CEO Paolo Ardoino cautioned that stringent cash reserve requirements could pose systemic risks to banks.
The delisting trend is not limited to stablecoins as Kraken recently announced it would halt trading and deposits of Monero (XMR) in the European Economic Area due to regulatory changes, following similar moves by Binance and OKX.
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