Tether Faces Pressure as EU MiCA Compliance Deadline Looms

Uncertainty surrounds Tether's USDT stablecoin as the deadline for complying with the European Union's MiCA (Markets in Crypto-Assets) regulations approaches on Dec. 30.

The stablecoin could face removal from European exchanges if it fails to comply with MiCA, which aims to standardize EU market rules for crypto-assets. In the past year, USDT has accounted for nearly 68% of global stablecoin trading volume and currently has a market capitalization of around $140 billion, according to DefiLlama.

The uncertainty surrounding USDT’s future in Europe highlights the broader challenges facing the cryptocurrency industry as regulations evolve. A potential delisting of USDT could disrupt liquidity, making it harder for users who rely on the stablecoin for transactions to operate effectively.

Coinbase Delisting

In mid-December, Coinbase preemptively delisted USDT due to compliance concerns with MiCA, and this could prompt other exchanges, such as Binance, to follow suit if Tether fails to meet the stringent requirements.

Alan Orwick, co-founder of Quai Network, explained that these regulatory hurdles could significantly limit USDT’s availability on European platforms.

To address this, Tether recently invested in a MiCA-compliant stablecoin issuer, StablR. “If Tether and StablR are not able to meet the EU's regulations by Dec. 30, this could open the door for MiCA-compliant stablecoins like USDC and Euro-based tokens to take the lead,“ Orwick said.

Despite Coinbase’s decision, USDT continues to be traded on other exchanges. Platforms like Binance and Crypto.com have opted to delay any action until more definitive regulatory clarity emerges.

All About MiCA

MiCA came into effect in June 2023 with the goal of establishing a unified legal framework for the 27 EU member states, ensuring consistent regulatory standards across the region. Before MiCA, crypto firms had to navigate a patchwork of regulations and obtain multiple licenses to operate in different EU countries.

“The entry into force of the MiCA regime from 30 Dec. 2024 marks a significant step towards having a regulatory framework for the crypto market in place,” Verena Ross, European Securities and Markets Authority (ESMA) Chair, said in a press release. “Nevertheless, it is crucial to recognise that the new regime would not suffice to eliminate the inherent uncertainty and volatility in the crypto-assets market, and investors should fully understand the risks before engaging in this space.”

Looking ahead, Ross said that ESMA will continue to provide guidance and work with all NCAs to “ensure the smooth implementation of MiCA and to support a level playing field through supervisory convergence actions.”