Markets
Could the Tether delisting signal issue for USDT in Europe be sustained?
Uphold, a popular crypto exchange based in New York, announced the delisting of six stablecoins in response to the upcoming MiCA regulation in the European Union, including Tether (USDT) – the largest of the cohort.
The move is consistent with the Markets in Crypto Assets (MiCA) regulations, which take full effect on June 30, 2024. Adopted in May 2023 and partially enacted a month later, MiCA requires all digital assets to comply with its many regulations.
However, this raises concerns about the future of USDT in the region.
Implications of the MiCA scheme on Tether (USDT)
According to Tim Wang, COO of Elixir, the short-term effects could lead to market disruption in liquidity and trading due to the dominance of USDC and USDT on centralized exchanges.
In an exclusive statement to CryptoPotato, the Elixir director mentioned that a mid-term solution would likely be necessary unless the EU decides that it no longer wants to be involved in facilitating crypto markets.
Wang also noted that stablecoins and US dollar-backed assets remain the primary form of collateral in crypto markets, as euro stablecoins have failed to gain widespread adoption.
New EU crypto laws impose strict regulations on stablecoins and fiat-backed e-money tokens that exceed a specific adoption threshold defined by seven quantitative and qualitative indicators. This system entrusts supervision to the European Banking Authority rather than to national authorities.
The main provisions of MiCA include 1:1 support for fiat currency-based stablecoins with liquid reserves, reserve asset segregation, and a ban on algorithmic stablecoins.
Uphold is not the only one to have ceded under pressure. In a bid to ensure compliance and avoid regulatory issues, several major crypto exchanges such as Kraken, Binance, and OKX have made certain changes to their stablecoin listing policies.
Stablecoin hegemony at stake
While the next MiCA regulations In the EU, this could set a precedent influencing crypto regulations in other regions, including the US, but the stablecoin provisions may not have the same importance.
Unlike other regulatory frameworks originating in Europe and adopted in the United States, such as the GDPR which evolves into CCPA in California, Wang believes that the regulation of stablecoins will be more complex since the “hegemony of stablecoins” will become increasingly a controversial political topic, exemplified by the former president. Donald Trump’s recent speech meetings with US-based Bitcoin miners to discuss the future of mining in the country.
“This can easily become the same case as with USD compared to other foreign currency stablecoins.”