With the implementation of the MiCA framework last year, significant changes are underway in the stablecoin and cryptocurrency sectors. Just two weeks after obtaining its MiCA license, Crypto.com plans to discontinue trading Tether’s USDT on their platform within the European Union.
Tether has yet to acquire their MiCA license due to a lack of transparency regarding their reserves, which has been a point of ongoing criticism. The deadline for USDT’s delisting is set for January 31, 2025.
The decision to remove Tether comes as a result of USDT failing to satisfy the strict compliance requirements laid out by MiCA. The exchange will likewise suspend trading on nine additional tokens.
Another one, this time @cryptocom delisting $USDT, $WBTC and others in Europe @justinsuntron @paoloardoino pls fix pic.twitter.com/cSJGm6Ax2h — Wazz (@WazzCrypto) January 28, 2025
Aside from USDT, other tokens facing delisting include Wrapped Bitcoin (WBTC), Dai (DAI), Pax Dollar (PAX), Pax Gold (PAXG), PayPal USD (PYUSD), Crypto.com Staked ETH (CDCETH), Crypto.com Staked SOL (CDCSOL), Liquid CRO (LCRO), and XSGD (XSGD).
A representative from Crypto.com mentioned that “Users holding these tokens will have until the end of the first quarter, March 31st, to exchange them for MiCA-compliant assets; otherwise, they will be converted to a stablecoin or asset of equivalent market value.” Investors will still have the option to withdraw these tokens until the first quarter ends in 2025, with complete delisting expected by March 31, 2025.
Under MiCA, new standards for stablecoins have been established to safeguard investors, ensure financial stability, and promote transparency. One key requirement mandates that stablecoins demonstrate their reserves, compelling issuers to maintain their reserves at acceptable levels and partake in regular audits to affirm their asset stability.
Impact of USDT Delisting and Challenges Ahead
Should stablecoin issuers intend to operate within the EU, they face two options: comply with MiCA or risk exclusion from the European marketplace. Tether has yet to embrace compliance. The company perceives converting its US bond holdings to liquid assets in European markets as a risky strategy.
However, several complications may arise from the delisting of USDT from European exchanges. Given USDT’s pivotal role in the cryptocurrency market, its removal could hinder market liquidity, potentially lowering trading volumes and heightening price volatility for other cryptocurrencies. Investors could also confront challenges in hedging against market fluctuations. As market participants pivot to alternative stablecoins, the risk of market fragmentation and inefficiencies in cross-border transactions increases.
However, many exchanges are mitigating these challenges by establishing an EU presence to align with MiCA requirements. For instance, Gemini has recently made its main office based in Malta a hub for their MiCA activities.
