Tether (USDT), the world’s largest stablecoin, faces the risk of becoming illegal in Europe under the new Markets in Crypto-Assets (MiCA) regulations. With a compliance deadline of December 30, 2024, uncertainty looms over USDT’s future on European exchanges.
MiCA aims to bring transparency and stability to the EU’s cryptocurrency market. Stablecoin issuers are required to disclose reserves, follow strict operational standards, and ensure adequate liquidity. Critics have questioned Tether’s transparency, noting its reliance on assurance reports from BDO Italia rather than major audits.
Compliance Concerns
Tether has not issued new USDT coins for over two weeks, raising concerns about its readiness to meet MiCA standards. Coinbase has already warned users it may delist non-compliant stablecoins like USDT, advising a switch to alternatives such as USD Coin (USDC), which meets regulatory requirements.
If USDT is banned, European exchanges may face reduced liquidity and increased transaction costs. Cryptocurrencies paired with USDT could see price volatility, while traders might turn to alternatives like USDC or DAI. The disruption could weaken Europe’s position in the global crypto market, warned Joseph Hurtado of Granata Consulting.
Industry Response
Tether’s CEO, Paolo Ardoino, defended the company’s focus on practical use cases and partnerships. However, opinions within the crypto community are divided. While some welcome stricter regulations, others fear they could stifle innovation and harm the market.
The next days are crucial for Tether as it works to comply with MiCA regulations and avoid being delisted in Europe. A failure to adapt could have significant consequences for both USDT and the European cryptocurrency landscape.
