Kraken Plans to Remove USDT Tether from European Union Market

Bittime - Kraken plans to remove USDT Tether from the European Union market. Even though it is still just a plan or consideration, this information is certainly enough to shake the USDT Tether market as a whole.

What is the basis for Kraken to plan to remove USDT Tether from the European Union market? Check out the explanation here.

Kraken Considers Planning to Delete USDT Tether

Leading crypto exchange Kraken is considering ending support for stablecoin Tether in the European Union as it prepares for MiCA regulations that will come into effect in July.

While these new regulations are not yet fully finalized, they could call into question the legitimacy of USDT, as regulators emphasize that many stablecoins circulating in Europe are not yet approved and regulated. 

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Kraken Prepares Worst Case Scenario

This ambiguity and uncertainty prompted Kraken to prepare for the worst.

“We are absolutely planning for all contingencies, including situations where it is impossible to list certain tokens like USDT,” Marcus Hughes, Kraken's global head of regulatory strategy , told Bloomberg in an interview, stating that the exchange was preparing itself for the impact of MiCA's regulations. will come.

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Hughes added that Kraken is “actively reviewing” Tether's legal status and will make a decision once the regulatory “position” becomes clearer.

When asked for comment, Tether confirmed to another publication that it has no plans to delist USDT or change its trading pairs. 

However, the stablecoin issuer confirmed that they are continuously evaluating their global strategies and operations to ensure compliance.

Although the European Banking Authority has not yet finalized the new regulations, current mandates requiring stablecoin issuers to meet increasingly stringent regulatory requirements could pose significant challenges for the crypto market in the European Union, especially considering Tether's position.

Tether's View on MiCA Policy

Tether CEO Paolo Ardoino recently stated that the company does not plan to comply with MiCA regulations in the near future, and expressed concerns regarding the risks and potential impact of the new regulations.

The unwillingness of stablecoin issuers to comply with upcoming regulations will make USDT illegal in the European Union, so exchanges in the region are preparing to delist these tokens.

Ardoino revealed that Tether is still in discussions with regulators regarding their concerns. 

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He stated that MiCA could force EMIs and credit institutions to legally issue fiat stablecoins in the European Economic Area, meaning Tether would have to become an EMI or partner with one to continue offering USDT legally in the region.

"This will pose a major risk to regulated stablecoins in the EU," Ardoino said on social media, while urging regulators to learn lessons from incidents such as the collapse of Silicon Valley Bank and its impact on major US stablecoins. "If banks fail, uninsured cash will also disappear," he added.

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Ardoino emphasized that stablecoins should be allowed to hold 100% of their reserves in treasury bills to avoid potential banking failures and ensure greater market stability.

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However, unless MiCA changes its current regulations or Tether decides to comply with them, USDT's legal status in the European Union is expected to become illegal next July. 

Therefore, preparing to delist these stablecoins may be the best move to continue operating in the region.

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Implications

Tether's unwillingness to comply with the new MiCA regulations could create major obstacles for exchanges and platforms in the European Union. 

As the world's largest stablecoin with a market capitalization exceeding $111 billion, Tether's delisting from major exchanges could have far-reaching impacts, shaking markets and potentially disrupting trading activity. 

The move could force users in the EU to look for regulatory-compliant alternative stablecoins, which could lead to changes in liquidity and trading patterns in the crypto market.

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