As the European Union's Market Regulation in Crypto-Assets (MiCA) approaches implementation, cryptocurrency exchange Kraken is contemplating the removal of support for stablecoin Tether (USDT).
Bloomberg reported on May 17 that Kraken is actively evaluating plans to adhere to the forthcoming MiCA framework. This regulation will be phased in two stages: the rules concerning stablecoins (Asset-Referenced Tokens or ART and Electronic Money Tokens or EMT) will take effect on June 30, 2024, while those applicable to cryptocurrency service providers will be enforced on December 30, 2024.
Marcus Hughes, Kraken's global head of regulatory strategy, stated, "We are absolutely planning for all eventualities, including the inability to list certain tokens such as USDT. We are actively reviewing this issue and as the position becomes clearer, we can make firm decisions on this."
In response to Kraken's considerations, Tether expressed its expectation that the exchange would prioritize Euro liquidity for European customers while retaining USDT as an onboarding and exiting solution. The MiCA regulations do not explicitly reference "stablecoin," but both ART and EMT fall under this category, with the European Banking Authority (EBA) having the authority to designate them as "significant" based on specific criteria. Larger stablecoins like USDT will face a daily trading volume cap of €200 million.
Tether CEO Paolo Ardoino voiced criticism of European regulations, indicating the company's reluctance to be regulated under MiCA. Ardoino particularly highlighted a requirement that 60% of stablecoin reserves must comprise cash deposits at multiple banks, emphasizing the difficulty in securing banking partnerships. As of the latest data available, USDT's market value stands at US$111.2 billion, with a global trading volume of US$61.24 billion.
Following a similar trajectory, cryptocurrency exchange OKX ceased USDT trading pairs in the European Economic Area back in March to ensure compliance with impending regulations.
