Crypto exchange Kraken is considering removing support for stablecoin Tether (USDT) in the European Union as the Markets in Crypto-Assets Regulation (MiCA) is set to take effect.
According to a Bloomberg report on May 17, Kraken is “actively reviewing” plans to comply with the upcoming MiCA framework. The regulation will be applied in two phases: rules applicable to stablecoins (asset-referenced, or ARTs, and e-money tokens, or EMTs) will come into force on June 30, 2024, while rules applicable to crypto service providers will take effect on Dec. 30, 2024.
“We’re absolutely planning for all eventualities, including situations where it’s just not tenable to list specific tokens such as USDT,” said Marcus Hughes, Kraken’s global head of regulatory strategy. “It’s something that we’re actively reviewing, and as the position becomes clearer, we can take firm decisions on that.”
Responding to Kraken’s remarks, Tether reportedly said it expects exchanges to “rightfully focus on EUR liquidity for European customers, while maintaining USDT as an on-ramp off-ramp solution.”
The MiCA regulation does not use the term “stablecoin,” but ARTs and EMTs are both types of stablecoins that the European Banking Authority (EBA) may consider “significant” based on an established set of criteria. For larger stablecoins, such as USDT, transactions are limited to 200 million euros per day.
Tether’s CEO, Paolo Ardoino, recently criticized the European regulation, saying the company does not intend to be regulated under MiCA. Specifically, Ardonio mentioned a requirement that 60% of stablecoin reserves be in cash deposits across several banks.
“Very few banks accept this type of business in Europe. It’s already very difficult to get just one!" Ardoino noted in an interview. At the time of writing, USDT has a market capitalization of $111.2 billion, with a global trading volume of $61.24 billion.
Fellow crypto exchange OKX made a similar move in March, discontinuing support for USDT trading pairs in the European Economic Area to comply with the coming rules.
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