Kraken, a leading cryptocurrency exchange, is considering withdrawing its support for stablecoin Tether (USDT) in the European Union due to the upcoming implementation of the Markets in Crypto-Assets Regulation (MiCA). The exchange is currently reviewing its plans to ensure compliance with the new framework. MiCA will be implemented in two phases, with rules for stablecoins and e-money tokens coming into effect on June 30, 2024, followed by rules for crypto service providers on December 30, 2024.
In response to Kraken’s considerations, Tether has expressed its expectation that exchanges will prioritize EUR liquidity for European customers while still offering USDT as an on-ramp and off-ramp solution. The MiCA regulation does not specifically use the term “stablecoin,” but it categorizes asset-referenced tokens (ARTs) and e-money tokens (EMTs) as types of stablecoins that may be deemed “significant” by the European Banking Authority (EBA) based on a set of established criteria. For larger stablecoins like USDT, transactions will be limited to 200 million euros per day.
Tether’s CEO, Paolo Ardoino, has criticized the European regulation, stating that the company does not intend to be regulated under MiCA. He specifically highlighted the requirement for 60% of stablecoin reserves to be held in cash deposits across multiple banks, noting the difficulty in finding banks that accept this type of business in Europe. As of now, USDT has a market capitalization of $111.2 billion and a global trading volume of $61.24 billion.
OKX, another cryptocurrency exchange, previously discontinued support for USDT trading pairs in the European Economic Area in March to comply with the forthcoming rules.
In related news, 68% of Runes, a type of cryptocurrency, are currently experiencing losses. This raises questions about whether they truly offer an upgrade for Bitcoin.