Non-compliance with MiCA regulations: The Markets in Crypto-Assets (MiCA) framework requires stablecoin issuers to obtain an e-money license and meet specific regulatory requirements. Tether Limited, the issuer of USDT, has not obtained such a license, leading to concerns about its compliance with MiCA regulations.
Lack of transparency and auditability: Tether has been criticized for its lack of transparency in its reserves and audit practices. The company relies on assurance reports from BDO Italia, an accounting firm, but this has raised concerns about the reliability of its financial statements.
Risk of money laundering and terrorist financing: Tether has been accused of enabling illicit activities, such as money laundering and terrorist financing, due to its lack of robust anti-money laundering (AML) and know-your-customer (KYC) measures.
Concerns about capital requirements: MiCA regulations require stablecoin issuers to maintain sufficient capital reserves to back their liabilities. Tether’s reserves have been questioned, and some have expressed concerns about its ability to meet these requirements.
EU’s goal to increase oversight and reduce risks: The EU aims to increase oversight and reduce risks in the crypto market by introducing stricter regulations. Delisting USDT from European exchanges is seen as a step towards achieving this goal.
It’s essential to note that the ban or delisting of USDT is not a blanket prohibition, but rather a regulatory requirement for European exchanges to ensure compliance with MiCA regulations. Other exchanges outside the EU may still allow trading with USDT.