"Kraken, Crypto.com Race to Launch EU Stablecoins Amid MiCA Deadline"

Crypto exchanges Kraken and Crypto.com are among the latest players in the digital asset space to announce plans for launching their own stablecoins in the European Union (EU). This move comes in response to the EU's new regulatory framework, the Markets in Crypto-Assets (MiCA) regulation, which took effect in January 2023 and introduces stricter oversight on third-party stablecoin issuers.

Under MiCA, all stablecoins operating in the European market must obtain authorization from an EU-based financial regulator. Issuers must also demonstrate transparency in reserves, maintain stable backing with liquid assets, and comply with stringent consumer protection measures. The European Securities and Markets Authority (ESMA) has set a final deadline of March 2025 for exchanges to delist all unauthorized stablecoins, further pressuring issuers to either secure compliance or exit the region.

Kraken and Crypto.com are proactively developing proprietary stablecoins to ensure regulatory compliance and maintain operational stability within the EU. Kraken is reportedly planning to launch a US dollar-backed stablecoin through its Irish subsidiary, which would allow it to maintain its European presence without disruption. Crypto.com is also developing its own stablecoin, although details about its fiat backing and issuance structure remain undisclosed. The company recently secured a MiCA license from Malta's financial regulator, enabling it to operate across all European Economic Area (EEA) member states.

The shift toward in-house stablecoins is a direct response to the tightening regulatory grip on digital assets in Europe. It ensures that exchanges retain control over their liquidity and transactions rather than relying on third-party stablecoin issuers that may face legal uncertainty. MiCA is expected to set a global precedent for stablecoin regulation and will influence policies beyond the EU, including in the US and Asia.

MiCA requires stablecoin issuers to hold fully backed reserves in high-quality liquid assets, provide clear disclosures about redemption mechanisms, and obtain direct authorization from an EU member state. The regulation also introduces caps on large-scale stablecoins exceeding €200 million in daily transactions, aiming to mitigate systemic risks. Many stablecoin issuers are struggling to meet compliance deadlines, with Circle taking steps to align its USDC with MiCA, while other issuers, including Tether, have yet to finalize regulatory approvals. Exchanges are positioning themselves within the new framework, with KuCoin recently applying for a Mi