EU Silence on Tether’s Compliance with MiCA Raises Uncertainty

As the European Union's Markets in Crypto-Assets Regulation (MiCA) nears its full implementation on December 30, 2024, uncertainty persists surrounding the compliance of Tether’s USDt (USDT) stablecoin. While some exchanges in the EU have continued to list USDT, others, like Coinbase, have proactively delisted it, citing potential compliance risks under MiCA.

Coinbase Delists USDt Amid MiCA Compliance Concerns

In mid-December, Coinbase made the decision to delist USDt, a move it explained as a response to MiCA’s upcoming regulatory requirements. The delisting was part of Coinbase’s strategy to mitigate potential risks related to the stablecoin’s status in the EU. However, despite this action, USDt continues to trade on other exchanges operating in the region, such as Binance EU and Crypto.com.

This raises a key question: is USDT compliant with MiCA, or is it facing potential regulatory challenges in the EU? While EU regulators have remained silent on the matter, no official statement has been made confirming USDt’s non-compliance, leaving a cloud of uncertainty hanging over its future in the European market.

MiCA's Impact on USDT in the EU: Awaiting Clarity

Juan Ignacio Ibañez, a member of the Technical Committee of the MiCA Crypto Alliance, addressed the situation, noting that the lack of clear guidance from regulators doesn’t imply that USDT is automatically deemed non-compliant. He suggested that exchanges continuing to trade USDt, like Binance and Crypto.com, might be taking a "wait-and-see" approach, waiting for regulators to clarify their stance.

Ibañez pointed out that exchanges may not face immediate pressure to delist USDt, but as MiCA's implementation deadline approaches, delistings across the EU are still possible. He speculated that exchanges might adopt a gradual approach, adjusting to regulatory clarity as it unfolds.

The “Wait-and-See” Approach: A Risky Strategy

Despite some exchanges' hesitation to act prematurely, Ibañez warned that adopting a "wait-and-see" approach may not be wise. With MiCA’s stringent regulatory requirements looming, delaying action could expose exchanges to unnecessary regulatory risks.

MiCA’s implementation is set to take full effect on December 30, 2024, but there is an 18-month transitional period built into the regulation. This phase allows entities already operating under national laws to continue their services while transitioning to MiCA-compliant operations. However, without clear guidance on USDt, exchanges are left in a state of regulatory limbo.

Regulatory Silence on USDt’s Status Under MiCA

The European Securities and Markets Authority (ESMA), the key body overseeing MiCA compliance, has so far declined to provide a definitive statement on whether USDt complies with the regulation. In October 2024, ESMA informed Cointelegraph that it was working with stakeholders to address stablecoin-related issues under MiCA, but it did not confirm or deny USDt’s compliance status.

As of December 27, 2024, USDT remains available for trading on multiple EU-based platforms. However, the lack of clarity from ESMA leaves room for speculation on whether delistings will occur soon.

MiCA's Transitional Phase and Grandfathering Clauses

While MiCA’s full implementation is set to begin on December 30, 2024, the regulation also includes a 36-month timeline, with an 18-month transitional phase. During this period, exchanges and crypto service providers may continue operating under existing national regulations, thanks to provisions like the “grandfathering” clause. This allows entities providing crypto services under national laws before MiCA’s deadline to continue until July 1, 2026, or until they receive MiCA authorization.

However, not all EU member states are offering the same transitional period. Ten countries, including France and Estonia, will allow for an 18-month grandfathering period, while eight other nations, such as Austria, Greece, and Spain, will provide a 12-month transition. Six countries, including the Netherlands, will offer just a six-month transition period.

Conclusion: USDT’s Fate in the EU Still Unclear

As MiCA’s deadline approaches, the future of Tether’s USDt in the EU remains uncertain. While some exchanges have taken precautionary steps, such as Coinbase’s delisting, others are adopting a more cautious approach, waiting for clearer guidance from European regulators. The lack of clarity on USDt’s compliance with MiCA only adds to the confusion, leaving exchanges and users in a state of uncertainty as the regulation’s full implementation draws near. With the transitional phase allowing some leeway, it remains to be seen whether USDt will eventually face delistings across the EU or if it will adapt to meet MiCA’s requirements.