European crypto legislation will come into effect on December 30, 2024. Markets in Crypto-Assets Regulation (MiCA), fully operational. These regulations aim to provide clear and consistent rules for the crypto and blockchain industry within the European Union (EU). While many industry leaders are applauding this development, there is uncertainty surrounding the status of Tether’s USDT stablecoin.
Coinbase removed USDT from its offering earlier this month due to compliance risks, while other platforms such as Binance EU and Crypto.com continue to trade the stablecoin. This begs the question: is USDT compliant with MiCA rules or not?
Transition period and interpretation of MiCA
According to Juan Ignacio Ibañez of the MiCA Crypto Alliance, the lack of an explicit ruling does not automatically mean that USDT complies with the new rules. MiCA is introducing a transition period that could last until July 2026. During this period, existing crypto service providers may continue to operate under certain conditions while they work towards full regulatory compliance.
The length of this transition period varies per EU member state, ranging from six to eighteen months. This can lead to differences in consumer protection and supervision per country. Some countries have a longer transition period, while others are stricter in their implementation.
The dilemmas for exchanges
Exchanges face a tough choice: continue offering USDT or avoid the risk by delisting the stablecoin early.
- Risks of offering USDT:
If the stablecoin does not comply with MiCA regulations in time, this may lead to fines or other sanctions. In addition, the implementation dates of the rules differ per country, which makes the situation complex. - Risks of early removal:
Exchanges that remove USDT from their offerings too early risk losing users and liquidity. This can have negative consequences for their revenues and competitive position.
What does this mean for the future?
While it is possible that USDT will soon become MiCA compliant, the uncertainty surrounding the stablecoin remains a challenge for exchanges and users. How the situation develops depends on the interpretation of MiCA by different member states and the speed at which stablecoin issuers such as Tether adapt to the regulations.
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Source: https://newsbit.nl/verwarring-over-usdt-voldoet-de-stablecoin-wel-of-niet-aan-de-mica-regels/
