USDT Problems in Europe: Why Crypto Exchanges Are Restricting the Tether Stablecoin Published: 05.12.2024Reading time: 5 min. Opinion American crypto exchange Coinbase will stop providing access to USDT to users from EU countries by the end of the year. What's going on? What will happen next to the world's most popular stablecoin? How will this affect USDT holders? Why Coinbase Doesn't Like USDT Coinbase is a trading platform and a commercial company that is trying to make money. It is not omnipotent and tries to operate within a certain legal framework, and in different jurisdictions. To put it simply, Coinbase is obliged to obey the laws of the countries where it operates. The European Union (EU) has its own set of rules that regulates the circulation of cryptocurrencies - Markets in Crypto-Assets Regulation (MiCA). It imposes a number of requirements on stablecoins. USDT, like some other cryptocurrencies, does not meet these requirements. To avoid problems with European authorities, Coinbase is delisting the Tether stablecoin for customers in the Eurozone. Users from other regions of the world can continue to use the coin, and they will not be affected by the changes.But what exactly is wrong with Tether? And why is Coinbase delisting it? Does USDT comply with MiCA standards on other crypto exchanges? MiCA requirements for stablecoins Specifically, the requirement for USDT is that the issuer (i.e. Tether) must keep 60% of its reserves in European banks. Considering that there are currently about $135 billion in tokens in circulation, it is only necessary to transfer $81 billion to European credit institutions. Tether is not going to do this yet. It is worth noting that reserve requirements are not the only problem with stablecoins. Companies that issue such assets must have special licenses - credit institutions or electronic money institutions. At the same time, MiCA does not use the term "stablecoin". All assets there are divided into: Asset-referenced tokens - stablecoins for gold, silver and other goods. E-money tokens are stablecoins that are tied to a specific fiat currency. Other tokens. European legislation also requires any stablecoin to have a so-called "White Paper", i.e. technical documentation describing the concept of the project.It must spell out every little detail: what technology underlies the cryptocurrency, who issued it, what are the associated risks. In addition, this document must be approved by a government agency. Plus, all companies involved in the release of stablecoins must have a well-developed risk management system. For tokens that are not tied to the euro, there are limits on the number of transactions per day - 1 million coins or, if in money, 200 million euros. And the companies launching stablecoins must periodically report to institutions such as the European Banking Authority and the European Securities and Markets Authority. In general, there are many requirements, and it is difficult to comply with them. However, there are stablecoins that comply with MiCA. For example, USDC of the American company Circle. Crypto exchanges' reaction to MiCA Coinbase is far from the first exchange to introduce certain restrictions regarding stablecoins. Another US platform, New York-based Uphold delisted USDT, FRAX GUSD, USDP and TUSD for Europeans back in July 2024.OKX, based in the Seychelles, delisted USDT for residents of EU countries before MiCA came into force on March 18. Interestingly, OKX itself explained its action by the desire to focus on spot trading in euros. The American exchange Kraken reported back in May that it was considering delisting USDT in Europe. However, as of early December, no specific steps had been taken in this direction. In the summer of 2024, the Luxembourg platform Bitstamp delisted another stablecoin from Tether, EURT, which is pegged to the euro. The reason was the same - MiCA. Binance said back in June that it would not delist tokens that do not comply with MiCA. However, the platform stated its intention to limit access to certain products through these cryptocurrencies for European residents. Among others, launchpool and earn were named. So it is not really necessary to say that Coinbase has some kind of biased attitude towards USDT or that the rules on different exchanges differ. #binance
