The European Securities and Markets Authority has asked the European Commission to strip custody and transfer services from non-compliant stablecoins, not just trading access. The proposal, filed as part of a MiCA regulation review, sets no implementation date and no exception for holders who already own the tokens.
The European Securities and Markets Authority wants to extend the EU's restrictions on non-compliant stablecoins beyond trading to the services that let customers keep and move them. If adopted, the change would remove the option of leaving such tokens with a licensed custodian after their trading pairs disappear.
A broader compliance test
In its September 30, 2026 response to a review of the EU's Markets in Crypto-Assets regulation, ESMA asks the Commission to prohibit every licensable crypto-asset service involving stablecoins that fail the regulation's requirements. Custody and transfers fall within that service list. The consequence would reach existing holders who have stopped trading, as well as customers seeking to buy.
That marks a further step from the regulator's January 2025 approach, which said mere custody and transfer should remain possible. A historical example shows the earlier distinction: in March 2025, Binance planned to remove nine tokens' trading pairs for European Economic Area users while keeping deposits, withdrawals, conversions and custody available. The September response would replace that activity-by-activity distinction with a broader asset-compliance test.
No exit mechanism specified
Section 3.2 of ESMA's submission gives no implementation date, withdrawal exception or wind-down mechanism. That omission matters because ending custody requires a way to return assets a provider already controls, while the proposed prohibition also reaches transfer services. An existing holder would therefore not avoid the restriction by deciding never to trade again.
A July 2026 paper by Nicola Borri and Kirill Shakhnov, examining USDT and USDC trading across 14 exchanges from January 1, 2024, through December 7, 2025, found that around the April 1, 2025 event date, USDC's share of combined USDT and USDC trading rose by about six percentage points on regulated-facing exchanges relative to global exchanges. The authors estimate USDT trading volume fell about 20% on those same regulated-facing exchanges relative to global venues, while the USDC-volume estimate was not statistically significant. The study measures exchange turnover, not worldwide demand or EU custodial balances, so it does not establish how the proposal would affect global stablecoin demand.
ESMA's response is a policy submission, not an enacted amendment. The next consequential text would be a legislative amendment, and how it reconciles an end to custody with the return of clients' assets would determine whether existing holders must leave regulated services.
Source: CryptoSlate
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