In a significant development for the European cryptocurrency market, major exchanges such as Kraken and Crypto.com are moving to develop their own stablecoins. This proactive shift comes in response to the EU’s newly implemented regulatory framework, which aims to tighten oversight on third-party stablecoin issuers.
Regulatory Overhaul with MiCA
The Markets in Crypto-Assets (MiCA) regulation, which took effect in January, represents a sweeping change for the stablecoin industry. Under MiCA, all stablecoins—classified as either “e-money tokens” (EMTs) or “asset-referenced tokens” (ARTs)—must secure authorization from an EU-based financial regulator. Issuers are required to demonstrate complete transparency regarding their reserves, ensure backing by high-quality liquid assets, and adhere to strict consumer protection measures.
This comprehensive regulatory shift has already reshaped the landscape in Europe. Several well-known stablecoins, including Tether’s USDT and PayPal’s PYUSD, have been removed from most European exchanges due to non-compliance. Furthermore, the European Securities and Markets Authority (ESMA) has set a final deadline of March 2025 for all exchanges to delist unauthorized stablecoins, placing additional pressure on issuers to meet these stringent requirements.
Kraken and Crypto.com’s Strategic Response
Against this backdrop, Kraken and Crypto.com have opted for a strategic pivot by developing their own stablecoins. Rather than relying on third-party providers that may face regulatory hurdles, these exchanges are choosing to maintain direct control over their digital asset liquidity and transactions.
Kraken is reportedly planning to launch a US dollar-backed stablecoin through its Irish subsidiary. This move is designed to safeguard its European operations by ensuring that its stablecoin meets MiCA’s regulatory demands without disrupting its market presence. Meanwhile, Crypto.com is also in the process of developing its proprietary stablecoin. Although specific details regarding its fiat backing and issuance structure remain under wraps, Crypto.com recently secured a MiCA license from Malta’s financial regulator, allowing it to operate seamlessly across all member states of the European Economic Area (EEA).
Broader Implications for the Crypto Industry
The introduction of MiCA is expected to set a global precedent, influencing stablecoin regulations beyond Europe—in markets like the US and Asia. The regulation mandates that issuers maintain fully backed reserves in liquid, high-quality assets and provide clear disclosures about redemption processes. It also introduces transaction caps on stablecoins exceeding €200 million daily, a measure aimed at mitigating systemic risks.
While some issuers like Circle have taken steps to align their stablecoins with MiCA, others, including Tether, have yet to secure regulatory approvals. This regulatory landscape is driving exchanges to explore in-house alternatives to ensure they remain compliant and competitive.
Other major exchanges are also feeling the pressure to comply. For instance, KuCoin has recently applied for a MiCA license in Austria, signaling a broader industry trend toward tighter regulatory alignment.
The development of proprietary stablecoins by Kraken and Crypto.com marks a pivotal shift in how major crypto exchanges are adapting to an evolving regulatory environment. By choosing to build in-house solutions, these platforms aim to safeguard their operations against regulatory uncertainties, maintain market stability, and continue to serve the European market effectively. As MiCA continues to influence global crypto policies, industry players are rethinking their strategies to align with new compliance standards while ensuring long-term operational resilience.
