The world's largest stablecoin, Tether (USDT), should be delisted across several exchanges in the coming days. This is due to Markets in Crypto-Assets (MiCA) regulations imposed by the EU that Tether has chosen not to comply with—so far, at least.
The regulatory requirements will take effect on December 30, 2024, but there is still little clarity from the major exchanges on what is coming.
OKX: This exchange was quick to align with the upcoming MiCA regulation, discontinuing Tether (USDT) trading pairs in the European Economic Area as early as March. This quick move by OKX reflects its commitment to regulatory compliance. However, as of today, USDT can still be purchased on the exchange.
Kraken: Kraken has removed Tether’s EURT from its offerings; however, as of this morning, USDT was still available to purchase. Kraken is one of the largest exchanges in Europe, and with the MiCA ban coming into effect in a few days, the lack of clear communication is concerning.
Coinbase: Perhaps one of the most closely watched platforms, Coinbase has already delisted USDT and is now actively promoting the use of Circle's MiCA-compliant USDC. The delisting occurred on December 13, and it was currently unavailable for trade or purchase on the site.
Prior to delisting, Coinbase released a clear statement: “Based on the latest information, we currently expect we will have to restrict services for the following assets: USDT, PAX, PYUSD, GUSD, GYEN, and DAI,” Coinbase told Cointelegraph, referring to the coins as assets restricted by MiCA.
Binance: As one of the largest cryptocurrency exchanges globally, Binance's decision to delist Euro Tether (EURT) was a significant indicator of how seriously the industry is taking the new MiCA regulations.
Binance's current advice to its EU users on the delisting of Tether is to "transition to Compliant Stablecoins." It goes on to explain that "as USDT exits European exchanges, compliant stablecoins like StablR's EURR and USDR may become more prominent, potentially reshaping the market."
StablR is a European stablecoin provider that has been gaining traction through strategic investments and compliance efforts, interestingly with Tether's support. StablR uses Tether's Hadron platform for tokenization, which simplifies the process of converting assets like stocks, bonds, and commodities into digital tokens.
Tether is also investing in other MiCA compliant stablecoin competitors like Quantoz. Based in the Netherlands, Quantoz has begun issuing EURQ and USDQ, pegged to the euro and dollar, respectively.
Overall, the picture is still a little messy for EU customers across the major exchanges. The lack of uniform response could lead to a fragmented market, with traders and investors needing to navigate a new landscape of compliant and non-compliant assets. The situation highlights the challenges and opportunities that MiCA presents.
Competing stablecoin providers will undoubtedly view the regulation as a chance to disrupt USDT's dominance in the EU market.
What About USDC?
Circle, Tether’s main competitor, applied for and received all required permits in July. This compliance not only solidifies Circle’s commitment to adhering to new regulations but also provides them with a competitive edge, potentially attracting users and investors looking for stable and compliant crypto assets in the region.
So far, there are signs of a healthy market. EUR Stablecoins hit a €2.6b volume in November, an impressive 160% rise from October and an 8626% increase from November 2023. As one analyst put it, "This growth would not be possible if it weren't for @circle and its $EURC stablecoin."
What is MiCA?
The European Union's Markets in Crypto-Assets (MiCA) regulation was drawn up to unify rules across EU member states for managing crypto-assets and service providers. It requires crypto-asset service providers to meet authorization and operational standards to increase transparency, ensure financial stability, and enhance consumer protection.
More transparency is good for consumer protection and stifling crime. Early this year, the US Department of Justice began an investigation into the "crime crypto"—allegations that Tether‘s USDT is the coin of choice for drug trafficking, human trafficking, and money laundering. The Wall Street Journal referred to USDT as the "shallow dollar fueling the financial underworld."
However, the crypto world typically resists transparency. It is still unclear why Tether has been unable to obtain a license or is even interested in applying, but it hasn't ruled out getting one in the future.
The EU v the U.S.
Trump’s election win as the first crypto-friendly president sent Bitcoin above $100,000 for the first time and triggered huge rallies across the market.
The expectation is that Trump will loosen regulations, and signs are already there since his appointment of Paul Atkins as the new pro-crypto head of the SEC.
With the EU moving in the other direction, the risk is stifled innovation and, frankly, the danger of being left behind.
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