Tether, one of the world’s leading stablecoins, is facing a regulatory crackdown in Europe that could have significant implications for the crypto market in the region. The European Union’s new Markets in Crypto-Assets (MiCA) regulations, set to take full effect by the end of the year, require stablecoins traded on centralized exchanges to be issued by firms with an e-money license. As a result, several crypto exchanges in the EU have started delisting Tether’s USDT, sparking concerns about liquidity and investor appeal.
USDT is a crucial tool for trade and settlement in the crypto ecosystem, and its removal from EU exchanges has already caused shifts in trading patterns. With fewer USDT trading pairs available, some exchanges are reporting an increase in fiat trading pairs as traders adapt to the new regulations. This development has raised fears that traders may be pushed away from EU territories or forced to trade in illiquid pairs.
Usman Ahmad, CEO of Zodia Markets, expressed concerns about the impact of the decision, describing it as “exclusionary and disruptive” for EU-based clients. He emphasized the importance of USDT as the most liquid stablecoin in the market and warned that banning access to it could have negative consequences for the region.
Critics of the MiCA regulations have argued that they could harm the EU’s competitiveness as a crypto hub. Pascal St-Jean, CEO of crypto asset manager 3iQ Corp, pointed out that a significant portion of cryptoassets trade against USDT, and forcing investors to trade out of USDT pairs could cause disruption in the market. Meanwhile, other regions, particularly North America, are experiencing a surge in crypto activity, with venture capital investment in European crypto startups projected to decline to a four-year low in 2024.
The contrasting regulatory approaches between Europe and the United States have also raised concerns about Europe falling behind in the crypto race. While the US seems to be moving towards a more crypto-friendly stance under President-elect Donald Trump’s administration, Europe’s strict regulations could hinder its ability to compete in the global crypto market.
Overall, the delisting of Tether in the EU is reshaping the crypto landscape in the region and raising questions about the future of crypto trading in Europe. As regulators continue to tighten their grip on the industry, it remains to be seen how market participants will adapt to the changing regulatory environment and what impact it will have on the overall growth of the crypto market in Europe.