As the European Union’s (EU) cryptocurrency regulations, known as Markets in Crypto-Assets Regulation (MiCA), are set to take full effect on December 30, 2024, there is still significant uncertainty surrounding Tether’s USDt stablecoin.
Coinbase Delists USDT: Compliance Concerns
In mid-December, United States crypto exchange Coinbase delisted Tether’s USDt (USDT) due to compliance concerns with the EU’s MiCA regulations. However, this has not led to a widespread delisting of USDT across the EU, as many exchanges continue to trade the stablecoin.
MiCA Compliance and USDt
According to Juan Ignacio Ibañez, a member of the Technical Committee of the MiCA Crypto Alliance:
No regulators have explicitly stated that USDT isn’t compliant, but this does not mean that it is.
Coinbase’s decision may reflect a proactive approach to avoid last-minute compliance risks or regulatory uncertainty, a precautionary approach.
Ibañez notes that while exchanges like Binance and Crypto.com continue to trade USDT, there are no reasons for them to delist the stablecoin on the same date as Coinbase. He suggests that the EU’s MiCA regulations may lead to a gradual delisting of USDT across the region:
We should look at the Dec. 30 date. The question is whether all exchanges will delist USDT at once, whether it will be progressive or whether some will play a ‘wait-and-see’ game expecting statements from the regulators.
Delisting Timeline and MiCA Requirements
Ibañez also comments on the potential risks of taking a "wait-and-see" approach to MiCA compliance:
The ‘wait-and-see’ approach doesn’t make much sense relative to other MiCA requirements, which could entail too much regulatory risk.
As the EU’s MiCA regulations are set to take full effect on December 30, 2024, exchanges that have not delisted USDT may be exposed to increased regulatory risks. This highlights the need for clarity from European authorities regarding USDt’s compliance with MiCA.
Contrasting Reports and Regulatory Uncertainty
There have been conflicting reports regarding the delisting of USDT in the EU. While some publications, such as Bloomberg, suggest that European crypto exchanges must delist Tether’s USDt by December 30, there is no clear guidance from European regulators on this issue.
USDT Delistings and Regulatory Clarity
In October 2024, the European Securities and Markets Authority (ESMA) declined to comment on whether USDt was seen as a restricted stablecoin under MiCA. An ESMA spokesperson stated that the regulator was working with market participants and other stakeholders to address stablecoin-related issues presented in MiCA.
As of December 27, USDT trading continues on many crypto exchanges operating in Europe, including Binance EU and Crypto.com. However, there is no clear indication from these exchanges regarding their plans for delisting USDT in the near future.
Binance’s Approach to Non-MiCA Stablecoins
Speaking to Cointelegraph, a Binance spokesperson emphasized that the exchange announced its approach to non-MiCA stablecoins in June 2024. According to the spokesperson:
USDT remains supported for custody; deposits and withdrawals are not affected. Nonetheless, we encourage users to use USDC and EURI as these are MiCA-compliant stablecoins.
MiCA Transitional Periods
The EU’s MiCA regulations provide for a transitional period during which existing exchanges can continue to operate under their current authorization until July 1, 2026. This is known as the grandfathering period, which allows regulated entities to continue operating without needing an additional authorization under the new rules.
During this time, there will be a mix of regimes coexisting across member states, which may result in disparate levels of protection for consumers of crypto-asset services. According to ESMA:
During the transitional phase, a mix of regimes will coexist across member states, which may result in disparate levels of protection for consumers of crypto-asset services.
The regulator has also provided a list of grandfathering periods decided by member states under MiCA, highlighting the varying lengths of these periods across different regions. This highlights the need for regulatory clarity and consistency during this transitional period.
Conclusion
As the EU’s MiCA regulations take full effect on December 30, 2024, there is still significant uncertainty surrounding Tether’s USDt stablecoin. Exchanges that have not delisted USDT may be exposed to increased regulatory risks, highlighting the need for clarity from European authorities regarding USDt’s compliance with MiCA.
The EU’s MiCA transitional periods provide a temporary reprieve for regulated entities during this time of change. However, as the grandfathering period comes to an end on July 1, 2026, exchanges will be required to comply with the new regulations or face delisting and potential regulatory consequences.
