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MiCA and Stablecoins: The Impact on USDT and Its Future in the EU

MiCA and Stablecoins: The Impact on USDT and Its Future in the EU

GamesPad: MiCA and Stablecoins: The Impact on USDT and Its Future in the EU 1

The European Union’s Markets in Crypto Assets (MiCA) Regulation came into force on December 30, 2024, marking the EU’s first comprehensive framework for cryptocurrency regulation. MiCA establishes clear guidelines for issuing and managing crypto assets, including stablecoins, and requires issuers to secure licenses and adhere to organizational and governance standards.

Despite these developments, Tether’s USDT, the largest stablecoin globally, has yet to obtain MiCA compliance certification. European regulators have not clarified whether USDT aligns with the new standards, leaving its future within the EU’s single market uncertain. What is MiCA, and how might it shape the trajectory of this major stablecoin issuer? Explore the details in the article.

About MiCA

MiCA classifies stablecoins into two main categories: asset-referenced tokens and electronic money tokens.

Asset-referenced tokens maintain stable value by tying it to one or more currencies, assets, or rights, excluding e-money tokens. 

Electronic money tokens, on the other hand, derive their stability from a single official currency. This category includes algorithmic stablecoins, which use protocols to adjust supply based on demand to remain stable against a currency or assets.

Under MiCA, stablecoin issuers must publish a white paper detailing their projects and maintain adequate reserves to back their assets. Issuers are also required to secure a license to operate within the EU. The regulation emphasizes consumer protection through transparency in advertising and mandatory customer service, alongside a requirement to hold at least 30% of reserves in low-risk EU-based commercial banks.

The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator, issued its final report on December 17, 2024. These reports include regulatory technical standards and guidelines to facilitate MiCA’s full implementation.

The Impact of MiCA on Tether (USDT)

MiCA enforcement imposes restrictions on stablecoins that fail to meet its regulatory standards. The list of “restricted assets” currently includes Tether (USDT), Pax Dollar (PAX), PayPal USD (PYUSD), Gemini Dollar (GUSD), GMO Trust’s GYEN, and MakerDAO’s DAI.

As of January 2025, Tether’s global market capitalization stands at approximately $137.3 billion, with USDT accounting for 78.32% of the global stablecoin market. Despite its dominance as the largest stablecoin by market capitalization, USDT’s status in the European market remains uncertain due to its non-compliance with MiCA’s operational requirements for stablecoin issuers. While MiCA aims to stabilize and legitimize the crypto market, USDT’s future under the regulation remains unresolved.

Experts suggest that complying with these requirements poses significant economic challenges for major stablecoin issuers. Under the new law, issuers must hold at least 30% of their reserves in low-risk commercial banks within the EU. This mandate could disrupt the broader crypto ecosystem, potentially impacting its stability and operations.

The USDT Future Under the MiCA Regulation

Tether CEO Paolo Ardoino criticized MiCA in a post on X, calling it “a massive gift to the traditional banking system.” He argued that requiring stablecoin issuers to hold over 30% of their reserves in banks primarily benefits legacy financial institutions, describing the regulation as favoring the old system over innovation.

Despite this critique, Tether has acknowledged MiCA and expressed readiness to meet its requirements. To comply, the company announced plans to discontinue its euro-pegged stablecoin, EURT, offering holders the chance to redeem their assets by November 27, 2025.

In a strategic move to strengthen its position in Europe, Tether has invested in StablR, a European stablecoin issuer behind EURR and USDR. StablR obtained an electronic money institution (EMI) license in Malta in July 2024, ensuring compliance with EU regulations, including MiCA.

However, Tether’s apparent hesitation to fully comply with MiCA poses risks, including potential regulatory penalties, fines, or even a ban on USDT within the EU.

For now, some crypto exchanges, including Coinbase, have removed USDT from their offerings for EU citizens. Others, like Binance, have imposed restrictions on USDT operations, allowing users to store USDT in wallets, sell it for regulated cryptocurrencies or fiat currencies, and engage in Spot trading, while other limitations apply. Major exchanges like KuCoin, Bitget, and OKX still permit P2P purchases of USDT with EUR. Meanwhile, exchanges like Bybit have opted not to restrict USDT trading or delist the token. Instead, they limit EU citizens’ participation in events hosted by the exchange.

Amid this uncertainty, investors may have pressing questions:

Is it legal for EU citizens to buy, sell, and hold USDT?
Yes, ownership of USDT remains legal. MiCA focuses on regulating the issuance, offering, and services related to crypto assets, such as trading platforms and custodial storage, rather than individual or company ownership of USDT.

Where can USDT be purchased?
USDT is still available on numerous trading platforms. However, regulators may restrict these platforms in Europe if they fail to secure the required licenses. Alternatively, decentralized exchanges remain an option for buying and selling USDT.

Could operations with USDT be banned, and if so, when?
This depends on the Member States. Some may enforce the new requirements immediately, while others may grant entities a transitional period of up to 18 months, allowing them to operate without a MiCA license until as late as July 1, 2026.

At GamesPad, we are closely monitoring the situation and have the technical capacity to facilitate raises in USDC BEP-20 if needed.

What’s Next for USDT?

Here is how Kirill Bavykin, our Corporate Compliance Manager, describes the impact of MiCA on the future of stablecoins in general and USDT specifically: “MiCA establishes regulatory requirements for crypto-asset issuers and service providers in the EU, replacing national laws and providing greater consumer protection. While it benefits consumers by enhancing trust and security in crypto services, market participants may face challenges adapting to the new rules. MiCA will also affect stablecoins like Tether USDT, requiring compliance with transparency, audit, and governance standards. Failure to meet these standards could limit Tether’s use in the EU, while compliance could boost its credibility. The impact on Tether will depend on how well it adapts to the new regulatory environment and faces competition from EU-native stablecoins”. 

USDT’s potential noncompliance with MiCA requirements holds significant implications for the global stablecoin market. While the immediate effects are most apparent in Europe, this regulatory shift could shape global preferences for stablecoins.

The stablecoin market is in a state of flux, with evolving regulations driving constant change. Developments may occur after the publication of this article, potentially affecting the accuracy or relevance of the information provided. Staying informed about the latest regulatory updates, especially within the EU, is strongly advised.