ESMA, Circle, Aave weigh in on MiCA · USDT comes to bitcoin — Mon 5 Oct

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The EU's consultation on revising MiCA has closed, and the responses show where Europe's crypto rules could change: whether stablecoin holders may earn a return, how reserves are held, and how DeFi is regulated. ESMA, Circle, Aave and more than 50,000 Europeans have all weighed in.

Some stories in Kaupr Daily:

💎 S&P Global launches risk assessments for DeFi lending vaults
💎 Supabase raises $150 million as agents create most new databases
💎 B3 Labs lets owners rent out idle AI compute
💎 Tether's USDT launches on bitcoin this month

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The European Commission's consultation on revising MiCA closed on 30 September. The responses show where the disagreements lie: whether stablecoin holders may earn a return, how stablecoin reserves should be held, and how DeFi should be regulated. MiCA applies across the EU and EEA, including Norway.

ESMA, the EU's markets regulator, wants MiCA to create a new licensed service for firms giving users access to DeFi, with clearer criteria for what counts as genuinely decentralised. It proposes stricter rules for influencer marketing, binding opinions on token classification, and a ban on regulated firms serving stablecoins that breach MiCA.

Why it matters: ESMA's proposal would bring the firms that connect users to DeFi protocols under licensing for the first time.

Source: ESMA calls for changes to make MiCA clearer, safer and ready for emerging services — ESMA (Source: press release)

MiCA requires e-money token issuers to hold at least 30% of reserves in bank deposits, 60% for significant tokens. Circle, issuer of USDC and EURC, wants that replaced by a liquidity requirement, and the ECB agrees. In 2023, $3.3 billion of USDC reserves sat at the collapsed Silicon Valley Bank.

Why it matters: Circle argues that the current rule ties stablecoins to the banks' own risks, and that more flexible reserve rules would help Europe's stablecoin market grow.

Source: Hyperliquid Policy Center, Circle press EU on perps and stablecoin reserves in MiCA review — The Block

The ECB wants MiCA's ban on paying interest on stablecoins extended to lending and staking. Aave Labs, founded in Helsinki, argues that a return from lending stablecoins through a non-custodial protocol is the price borrowers pay, not a reward for holding. It wants MiCA to exclude both lending returns and staking rewards from the definition of interest.

Why it matters: Lending returns are what make stablecoins useful in onchain markets. Banning them for MiCA tokens alone would, Aave argues, leave euro stablecoins unable to compete with dollar tokens.

Source: Europe Wrote the First Crypto Rulebook. Now It Can Write the First Rulebook for Onchain Finance. — Aave (Source: company response)

More than 50,000 Europeans have urged the European Commission, through Stand With Crypto EU, to let regulated stablecoins offer rewards such as cashback and loyalty schemes. A separate petition has over 126,000 signatures. The European System of Central Banks wants the opposite: keeping the interest ban and extending it to lending, borrowing and staking.

Why it matters: MiCA does not directly ban cashback, only benefits that work like interest. Where that line is drawn decides what stablecoin users in Europe can be offered.

Source: Europeans Urge MiCA Rule Changes for Stablecoins — ForkLog

The Hyperliquid Policy Center argues that perpetual futures, contracts that track a price and never expire, belong under MiFID II, the EU's derivatives rulebook, not under MiCA. It asks the Commission to confirm this through ESMA guidance rather than new law, and not to treat them like contracts for difference.

Why it matters: The choice of rulebook decides who supervises these markets and which investors can access them. Treating perpetuals like CFDs would bring the strict retail limits ESMA set for CFDs.

Source: HPC Urges the European Commission to Build on the EU's Existing Rules for Onchain Markets — Hyperliquid Policy Center (Source: advocacy group)

📈 Trendline: Has the structure finally shifted?

In the first edition of Trendline, Kaupr's new weekly technical analysis, Venkat Hrushikesa Varri explains why bitcoin's structure is improving, and why $87,500 is the level to watch.

👉 Read the Trendline post →

Trendline is part of Analysis, our new page for Kaupr's recurring market analysis: Trendline every Monday, Outlooks from Nordic and European analysts, and Kaupr Weekly, our podcast on the longer lines in onchain finance.

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S&P Global Ratings has launched Vault Risk Assessments for onchain lending vaults, which pool deposits and lend them out like fixed income funds. Deposits in such vaults have grown from $1.5 billion to $10 billion in two years. The assessment weighs six risks, including curator, protocol and liquidity risk, and is not a credit rating.

Why it matters: A rating agency's framework gives institutions a standard way to judge onchain lending, a step towards treating vaults like other funds.

Source: S&P Global Ratings launches Vault Risk Assessment for digital asset markets — S&P Global (Source: press release)

Supabase has raised $150 million led by GIC, with Alphabet's growth fund CapitalG participating, four months after a $500 million round. It is also buying Turso, which provides low-cost databases for agent workloads. Supabase adds more than four million databases a month, and 70% of new ones are created by agents or AI tools.

Why it matters: AI agents now build much of the software they use, and infrastructure providers are reshaping their products around that.

Source: Supabase Announces $150M in New Funding and Turso Acquisition — Supabase (Source: press release)

On the Milk Road podcast, B3 Labs co-founder Victoria Hying describes B3 IQ, a marketplace where customers own Nvidia systems that B3 hosts in Oregon, and rent idle capacity to AI labs and researchers. B3's financing can cover 70% of a machine's price, with revenue from a buyer of the capacity helping repay the rest.

Why it matters: Compute is becoming something firms can own, finance and earn from, not just rent from the large clouds.

Source: What If You Could Own Your AI Compute - And Get Paid for It? — Milk Road

Kaupr reported on 28 September that Tether's USDT is returning to bitcoin; Utexo now expects to begin issuing it this month. Utexo plans private USDT transfers, direct swaps between bitcoin and USDT, and loans against native bitcoin. Rather than freezing addresses, it would blacklist bitcoin outputs linked to sanctioned activity.

Why it matters: The largest stablecoin started on bitcoin before moving to Ethereum and Tron. Its return brings dollar liquidity and lending to bitcoin without wrapping it on other chains.

Source: Tether's USDT is 'coming home' to Bitcoin after more than a decade — CoinDesk

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Wishing you a great Monday — and welcome back tomorrow morning for the next edition of Kaupr Today.

Best regards Morten Myrstad Founder & Edito