Kraken Considers Halting Support for Tether in EU Amid Upcoming MiCA Regulations
Summary:
Cryptocurrency exchange Kraken is contemplating discontinuing support for stablecoin Tether (USDT) in the European Union due to incoming Markets in Crypto-Assets Regulation (MiCA). The regulation will be applied in two phases, impacting stablecoins and cryptocurrency service providers. In response, Tether anticipates exchanges to prioritize Euro liquidity while maintaining USDT. Recently, Tether's CEO criticized the European regulation, indicating the company's unwillingness to operate under MiCA.
Kraken, a prominent cryptocurrency exchange, is reviewing the possibility of halting support for the stablecoin Tether (USDT) in the European Union due to the impending enforcement of the Markets in Crypto-Assets Regulation (MiCA). As set to be reported by Bloomberg on May 17, Kraken is taking active steps to ensure compliance with the forthcoming MiCA regulations. The two-stage regulation includes stablecoin rules pertaining to asset-referenced tokens (ARTs) and e-money tokens (EMTs) set to be implemented by June 30, 2024, and rules for cryptocurrency service providers expected to be enforced by Dec. 30, 2024.
Kraken asserts readiness for all potential outcomes, including situations that might necessitate delisting specific tokens like USDT. The exchange is actively assessing the situation and will make definitive decisions as the regulatory landscape becomes more precise.
In response to Kraken's statements, Tether articulated its anticipation for exchanges to prioritize EUR liquidity for European patrons while continuing to facilitate USDT for on-ramp off-ramp operations. In its directive, MiCA doesn't explicitly mention "stablecoin" but identifies ARTs and EMTs, two categories of stablecoins that may be deemed "significant" by the European Banking Authority (EBA) based on specific criteria. Larger stablecoins like USDT will have a daily transaction cap of 200 million euros.
Tether's CEO, Paolo Ardoino, expressed his disdain for the European regulations, stating the company has no plans to adhere to MiCA's guidelines. Specifically, Ardoino discussed a stipulation requiring 60% of stablecoin reserves to be in cash across multiple banking establishments.
"Acquiring the acceptance of many banks in Europe for this kind of business is already quite a challenge," said Ardoino in an interview. As of now, USDT has a market capitalization of $111.2 billion with a global trading volume worth $61.24 billion.
Furthermore, another crypto trading platform, OKX, also made similar compliance-driven decisions in March, terminating support for USDT within the European Economic Area. An intriguing development considering 68% of Runes are currently experiencing a downturn in the market, reigniting questions of their potential as a Bitcoin augmentation.
Published At
5/17/2024 8:11:01 PM
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