Will Tether's USDT soon disappear from Europe?

The world's largest stablecoin, Tether's USDT, may soon disappear from the European market. The reason for this is the recent implementation of the MiCA regulation by the European Union. But how serious are these concerns?

The Impact of MiCA on Tether

The crypto market is in turmoil due to the new rules introduced by the European Union. MiCA (Markets in Crypto-Assets) imposes strict transparency requirements on stablecoin providers, with a strong emphasis on the disclosure of reserves. These rules seem to be a stumbling block for Tether, which is currently struggling to obtain the necessary licenses. Some experts even predict that USDT could completely disappear from the European market.

New Regulations and Obligations

Since July 1st, stablecoin providers must comply with extensive rules. Vincent Peikert, founder of Noumena Digital, explains that these rules include licensing requirements, regular reporting, and strict anti-money laundering measures. Additionally, companies must ensure that their stablecoins are sufficiently backed by reserves, such as money market funds or cash. This is precisely where Tether faces challenges. The current mix of bonds, crypto, gold, and currency that Tether uses to back USDT may not meet MiCA's strict requirements.

Licensing Issues for Tether

The licensing process for Tether is progressing slowly. According to MiCA, stablecoins fall into two categories: those with and without a license. USDT falls into the latter category, which has serious implications for European users. Several exchanges have already restricted or completely removed USDT trading functions for users in the EU. Vincent Peikert emphasizes that exchanges have significant market power and can exert considerable pressure on issuers like Tether.

Doubts About Tether's Commitment

Tether's hesitant behavior raises questions about their commitment to MiCA registration. The legal requirements have been known for nearly a year, yet Tether has not responded to inquiries about this. Alexander Höptner, former CEO of Bitmex, points out that Tether will need to disclose a lot of information, something they might be reluctant to do given their success with USDT. Tether's main activity remains in Asia, where USDT has the highest trading volumes on exchanges like Binance, Bybit, and Huobi. Any potential restrictions in Europe could possibly be tolerated.

Circle as the Biggest Beneficiary?

The biggest winner in this situation could be Circle, the American company behind USDC, the second-largest stablecoin. Circle recently announced that it has obtained a MiCA-compliant e-money license in France. This would give them a significant advantage in the European market. Alexander Höptner suggests that Circle could fill the gap that Tether might leave behind.

While Tether is currently under pressure, it is still too early to draw definitive conclusions. The new regulations have only just come into effect, and the situation could still change. Tether may still adapt and comply with MiCA's requirements, but until then, the future of USDT in Europe remains uncertain.