The future of Tether (USDT), the world’s leading stablecoin, in the European Union is hanging in the balance. As of January 1, 2025, the new EU crypto regulation, the Markets in Crypto-Assets Regulation (MiCA), will come fully into effect. MiCA will impose strict rules on which stablecoins can be offered within the European Economic Area (EEA). The core requirement? Only stablecoins issued by entities holding an e-money license within at least one EU member state will be permitted.
Major Exchanges Taking Action
This regulatory change has already triggered reactions from major players in the crypto industry. Coinbase, alongside Binance and Kraken — some of the world’s largest crypto exchanges — announced that by the end of 2024, they will delist all unauthorized stablecoins from their platforms in the EEA. A spokesperson for Coinbase stated, “We regularly review the assets we make available to our customers to ensure they comply with applicable regulations. In November, we will share details of our transition plan to support our EEA customers, including options to switch to MiCA-compliant stablecoins, such as USDC and EURC.”
USDC and EURC are issued by Circle, a U.S.-based company. Circle has already obtained a license in France, positioning itself as a leading legal issuer of stablecoins in the European market. As a result, USDC — currently the second largest stablecoin by market capitalization — stands ready to fill any void left by USDT in the region.
Tether’s Silence on MiCA Compliance
Despite being the clear market leader with a market capitalization of around $120 billion, Tether has remained notably silent regarding its strategy to comply with MiCA. The firm, primarily based in the British Virgin Islands, has shown no indications that it intends to establish a presence in the EU or pursue the necessary e-money license.
Founded a decade ago, Tether claims to have more than 350 million users globally. Yet, it has not communicated any concrete plans to address the upcoming EU regulations. Instead, Tether has focused on diversifying its business into areas such as data, energy, and education. The company has reported strong profits, which it plans to reinvest, but there is still no word on whether it will take the steps needed to secure an EU e-money license.
Circle’s Opportunity and New Competitors
While Tether hesitates, other companies are moving quickly to seize the opportunity. Bitpanda, a European crypto platform, recently partnered with the French commercial bank Societe Generale to promote its euro-pegged stablecoin, EUR CoinVertible (EURCV). As MiCA implementation draws closer, it will be interesting to see if alternative stablecoins can capture market share from Tether.
What’s Next for Tether?
The implications of MiCA are clear: any stablecoin issuer wanting to operate within the EU must comply with stringent regulatory requirements, including the acquisition of an e-money license. If Tether fails to act, it could find itself excluded from the European market altogether, paving the way for competitors like Circle to dominate the space.
The countdown to January 2025 has begun, and all eyes are on Tether. Will it adapt and secure its place in the EU, or will it cede ground to more compliant rivals? The coming months will determine the fate of USDT in one of the world’s most significant economic regions.