MiCA Regulations Force Crypto.com to Drop USDT and Stablecoins
In Brief
Crypto.com delists Tether’s USDT and nine other digital assets due to Markets in Crypto-Assets Regulation, causing regional regulatory enforcement and questioning the future of digital assets in Europe.
Since the Markets in Crypto-Assets Regulation (MiCA) was put into effect, the cryptocurrency scene in Europe has changed dramatically. Crypto.com’s move to delist Tether’s USDT and nine other digital assets in order to comply with these new restrictions is among the most immediate effects of this legislative change.
The decision, which will go into effect on January 31, 2025, foreshadows increased regional regulatory enforcement. The action calls into doubt the future of digital assets in Europe and draws attention to the changing stablecoin legal environment.
The Effect of MiCA on Stablecoins
MiCA, which attempts to offer a thorough framework for cryptocurrency markets, is a significant development in EU financial legislation. The main goals of the law are to safeguard customers, maintain financial stability, and lessen illegal financial activity involving cryptocurrency assets. The strict regulation of stablecoins, which mandates that issuers adhere to strict guidelines for operational compliance, reserve management, and transparency, is one of its most important features.
Under MiCA, stablecoins that don’t comply with regulations have to either adapt to the new structure or be removed from EU trading platforms. The EU’s determination to enforce these regulations is demonstrated by the delisting of USDT, which is still the biggest stablecoin in the world with a market valuation of almost $139 billion.
The Strategic Decision of Crypto.com
The delisting of USDT and other non-compliant assets by Crypto.com is in line with MiCA’s regulatory enforcement. On January 31, 2025, the exchange will stop permitting purchases of these assets, however withdrawals will be permitted until March 31, 2025. Any assets that are still non-compliant after this date will be changed to authorized substitutes.
Wrapped Bitcoin (WBTC), Dai (DAI), Pax Dollar (PAX), Pax Gold (PAXG), PayPal USD (PYUSD), and other proprietary Crypto.com currencies are among the impacted tokens. This is not the first time the exchange has taken this action; in late 2024, Coinbase delisted USDT due to a violation of MiCA’s stablecoin framework.
USDT’s Role in the Crypto Market
As a commonly used trading pair on international exchanges, USDT has long been essential to the cryptocurrency ecosystem by lowering volatility and supplying liquidity. USDT is a crucial part of the cryptocurrency economy since, in contrast to fiat currencies, it enables quick and easy transactions across decentralized finance systems.
But for years, there have been worries about Tether’s reserve transparency and regulatory supervision. USDT has not yet complied with the MiCA framework’s requests for a greater degree of regulatory control in the EU. There are concerns about how trade dynamics and liquidity may change in the area as a result of Tether being delisted on European platforms.
Stablecoins that adhere to legal criteria should become more popular among European investors as a result of MiCA’s enforcement. A good substitute is Circle’s USD Coin (USDC), which was approved by MiCA in the middle of 2024. With a $52 billion market valuation, USDC is the second-largest stablecoin in the world. Additionally, its adherence to regulatory norms makes it a safer choice for traders residing in the EU.
There may be a rise in the use of other MiCA-compliant stablecoins, such as digital currencies that are tied to the euro. In response, Tether made an investment in StablR, a European company that specializes in euro-backed stablecoins, in an attempt to establish a presence in the European market. It is still unclear, though, if Tether will satisfy MiCA’s strict criteria for certification in the future.
The EU’s Prospects for Stablecoin Regulations
An important turning point for the European digital asset market is marked by the implementation of MiCA’s stablecoin regulations. Other platforms will probably follow suit in eliminating non-compliant assets as exchanges like Crypto.com proactively adjust to the regulatory environment.
MiCA provides more comprehensive regulatory measures that impact all crypto asset service providers (CASPs), not only stablecoins. In order to continue providing services, businesses operating in the EU must get the necessary permits, which raises the expenses of compliance and administrative demands. Some companies, like Crypto.com, are now working to get permits in Malta and other EU countries, while others have already received MiCA licenses.
The pressure from European regulators on USDT may have broader effects on the adoption of stablecoins globally. Tether may be subject to more delistings if authorities in other countries, such as the US, impose the same limitations. In emerging economies, where regulatory control is less strict, USDT is still commonly utilized.
Whether or not Tether can adjust to MiCA’s regulatory environment will determine its future in the European market. Even if USDT is still the market leader worldwide, its sway in Europe could wane as more market share is taken by alternatives that adhere to regulations.
The delisting of USDT and other non-compliant stablecoins by Crypto.com is an important step for the European cryptocurrency market. The EU’s dedication to consumer protection and financial supervision in the realm of digital assets is demonstrated by the implementation of MiCA legislation. Although USDT is still a major participant in the global cryptocurrency market, its future in Europe is unclear.
Stablecoin issuers and exchanges must manage new compliance obligations as the regulatory environment evolves in order to maintain market access. The USDT delisting is not just a singular incident; rather, it is a more comprehensive illustration of the growing regulatory scrutiny that the global cryptocurrency market is subject to.
Disclaimer
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About The Author
Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
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Victoria is a writer on a variety of technology topics including Web3.0, AI and cryptocurrencies. Her extensive experience allows her to write insightful articles for the wider audience.
