With the full implementation of the European Union (EU) Regulation on Markets in Crypto-Assets (MiCA) on December 30, 2024, the global stablecoin market is facing an unprecedented wave of regulation. As one of the world's largest stablecoins, Tether's USDT faces particularly severe challenges in this storm. Due to its lack of MiCA compliance certification, the future of USDT in Europe is filled with uncertainty.
The introduction of the MiCA regulations marks a new phase of EU regulation on the cryptocurrency market. The regulations set strict supervisory requirements for stablecoin issuers, including reserve and liquidity provisions. Under MiCA, small stablecoin issuers must keep 30% of their reserves in low-risk commercial banks within the EU, while large issuers like Tether must keep 60% or more of their reserves. This is undoubtedly a significant economic challenge for Tether.
"Given Tether's enormous capitalization and global acceptance, meeting this demand is economically unfeasible without disrupting the broader crypto ecosystem," said Agne Linge, Growth Director at WeFi, in an interview. However, Linge also pointed out that due to Tether's large market capitalization and global acceptance, it is unlikely to face immediate financial consequences from exiting the EU.
Nevertheless, the future of USDT in the European market remains full of uncertainties. Some European exchanges have already taken precautions. For example, Coinbase's European branch removed USDT and five other stablecoins earlier this month to avoid potential regulatory risks. This move highlights the exchanges' strict compliance with the MiCA regulations and the pressure they face under the new regulatory framework.
Meanwhile, other major exchanges like Binance and Crypto.com continue to support USDT in Europe while waiting for further clarification from regulators. These companies stated that they would make significant adjustments to their stablecoin products after closely monitoring the implementation of MiCA.
The comprehensive implementation of MiCA regulations not only affects stablecoin issuers like Tether but will also have far-reaching impacts on the entire EU cryptocurrency landscape. Uldis Teraudkalns, Chief Revenue Officer of Paybis, noted that the compliance costs and investments required by MiCA could drive small and even some large companies out of the EU market. However, he emphasized that MiCA enhances investor protection and reduces risks of fraud, money laundering, and market manipulation.
In addition to the MiCA regulations, EU member states are also implementing supplementary measures to regulate cryptocurrencies. For example, Italy plans to raise the capital gains tax rate on crypto assets from 26% to 42%, aligning it more closely with the tax rates on other investment income. This change indicates that cryptocurrencies are being seen as mainstream financial instruments and are subject to standard tax regulations.
As the MiCA regulations are fully implemented and countries adjust their tax policies, the future of USDT in Europe becomes increasingly uncertain. However, regardless of the outcome, this regulatory storm will have profound effects on the global stablecoin market, pushing the entire industry toward a more regulated and transparent direction.
In the face of this series of regulatory changes, Tether and other stablecoin issuers need to quickly adapt to the new regulatory environment and seek compliance paths to ensure their continued development in the European market. At the same time, investors and exchanges must closely monitor the implementation of MiCA and the adjustments in various countries' tax policies on cryptocurrencies to make informed investment and trading decisions.