In a stunning turn of events, the European Union (EU) is set to ban the use of USDT (Tether), the world’s largest stablecoin by market cap, on its territory. The ban, which is set to take effect in just four days, is part of new regulatory measures under the Markets in Crypto-Assets Regulation (MiCA), which aims to bring stricter oversight and transparency to the cryptocurrency industry. Here’s what it means and how you can prepare.
Why is USDT banned?
The EU MiCA regulation, which comes into force on December 31, 2024, imposes strict compliance standards for all stablecoin issuers. These include:
Full transparency of the reserves that support the stablecoin.
Compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) measures.
Registration and approval from relevant EU authorities.
Tether Limited, the issuer of USDT, has come under scrutiny for its reserve disclosures and compliance practices. While some stablecoins, such as USD Coin (USDC), have actively sought to comply with MiCA, Tether has failed to provide sufficient evidence to satisfy regulatory requirements. This has led to EU regulators announcing that USDT will no longer be legally supported in European markets.