02/01/2025
Everyone is saying that USDT is banned in the EU and will be delisted from all exchanges. No. Let us get it straight.
Yes, it is true that to issue a compliant stablecoin under MiCA, the issuer would need to be a regulated entity (normally an EMI). This has been the case since the end of June this year, and to be fair it was probably a requirement even before MiCA, but never enforced.
What changes now?
Nothing.
Yes, the rest of MiCA comes into force. but that primarily covers areas other than stablecoins.
Also, there is a grandfathering period of up to 18 months (up to each country), so we might see 2026 before MiCA is in full force EU-wide.
Will USDT be delisted across the EU?
Probably not in the short term.
Please keep in mind that this is a risk assessment made by each exchange, so it is impossible to say with certainty.
It is clear that Tether, the issuer of USDT, is not regulated in the EU, but that is not the same as USDT being banned.
Exchanges like Binance have already limited the use of USDT to a certain extent (earn, withdrawal, etc), but not for trading. I think this approach is consistent with proper risk management.
Coinbase has announced that it will delist USDT in the EU, but that is probably more because they have a close relationship with Circle, the issuer of USDC, than a risk assessment around USDT.
Over time, stablecoins will inevitably be regulated, also in the US and other key jurisdictions.
MiCA is too much too soon. But that is what happens when regulators primarily listen to lawyers and large industry players. Regulation kills innovation but also competition.
So, I expect most of the innovation in the industry to happen outside of the EU. We have already seen this shift, but it will accelerate in 2025.
I also expect that at some point, USDT will be delisted from exchanges in the EU, provided that the rules do not change or Tether does not come up with an alternative.