Europe’s New Rules Rattle Tether (USDT) as Major Exchanges Delist
Europe’s crypto landscape is undergoing a seismic shift, with Crypto.com announcing plans to remove Tether (USDT) by January 31, 2025. This follows Coinbase’s earlier decision to drop the world’s largest stablecoin, driven by stricter requirements under the EU’s Markets in Crypto-Assets (MiCA) regulations. At stake is USDT’s $138 billion circulation and its future in Europe.
Why Is Tether Being Delisted?
MiCA now demands that stablecoin issuers meet specific criteria, including holding more than 60% of their reserves in recognized banks and obtaining an e-money license. Tether has reportedly not met these standards, prompting exchanges to distance themselves from USDT and raising doubts about its continued presence in the EU.
Transparency Woes
Despite being the most widely used stablecoin, Tether has long faced scrutiny over transparency. It does not provide frequent or detailed audits of its reserves, leaving many questioning if it genuinely holds sufficient assets to back the billions in circulation. This lack of clarity has contributed to delistings, as significant exchanges seek to comply with MiCA’s tighter regulations.
Impact on the Crypto Market
USDT is critical in facilitating quick and liquid trades between crypto and fiat. Without Tether, liquidity could suffer, potentially slowing down transactions and increasing market volatility. Some traders have switched to fiat trading pairs, but fewer stablecoin options may mean less efficient trading and heightened price swings.
USDC: The Possible Successor
USD Coin (USDC) could benefit the most from Tether’s troubles. USDC undergoes monthly audits, holds reserves in regulated banks, and complies with strict U.S. financial rules. As European exchanges remove Tether, they may favor USDC to ensure compliance, potentially eroding USDT’s dominance in one of the world’s largest markets.
Future Outlook in Europe
MiCA’s stringent standards are set to reshape the European stablecoin landscape, favoring transparent, well-regulated issuers. While Tether remains the global market leader, its uncertain footing in Europe could pave the way for other compliant stablecoins to gain ground. The next few months will be pivotal, as issuers decide whether to meet MiCA’s requirements or risk losing access to the EU’s massive customer base.