Kraken Mulls Over Dropping Tether Support Amid Forthcoming EU Crypto Regulation
Summary:
Kraken, a leading crypto exchange, is considering discontinuing support for the stablecoin Tether (USDT) in the European Union due to the impending implementation of the Markets in Crypto-Assets Regulation (MiCA). The regulation, which will be enforced in two stages in both 2024 and 2025, has led to Tether's CEO criticizing the rules and expressing an intention not to comply. Meanwhile, OKX, another exchange, has already ended support for USDT trading pairs to adhere to the upcoming regulations.
Kraken, a prominent cryptocurrency exchange, is contemplating the discontinuation of support for the stablecoin Tether (USDT) in the European Union amidst the anticipated implementation of the Markets in Crypto-Assets Regulation (MiCA). A Bloomberg article published on May 17 reveals that Kraken is currently assessing strategies to conform to the imminent MiCA guidelines. This regulation will be implemented in two stages: with rules affecting stablecoins (referred to as asset-referenced or ARTs and e-money tokens or EMTs) coming into operation on June 30, 2024, and those affecting cryptocurrency service providers taking effect on December 30, 2024. Kraken insists it is fully prepared for all outcomes, inclusive of potentially untenable situations of listing certain tokens like USDT. Once the situation gets clearer, it hopes to make a definitive decision.
In response to Kraken's comments, Tether stated that it expects exchanges to focus on providing EUR liquidity to European customers, whilst still maintaining USDT as a means of on and off-ramp solution. The MiCA regulation refrains from naming "stablecoins", however, ARTs and EMTs, both stablecoin variants, may be deemed as "significant" by the European Banking Authority (EBA), according to certain set criteria. There's a 200 million euro limit per day on transactions involving larger stablecoins like USDT.
Paolo Ardoino, Tether's CEO, voiced criticism over the European regulation, declaring the company has no intention of complying with MiCA. Specifically, Ardoino pointed out a stipulation necessitating that 60% of stablecoin reserves be held in cash across multiple banks. He mentioned that securing business with even a single bank in Europe is extremely challenging due to the limited number of banks accepting this type of business. As of now, USDT boasts a market capitalization of $111.2 billion, with a global trading volume of $61.24 billion.
OKX, another crypto exchange, took a similar step in March by ceasing support for USDT trading pairs in the European Economic Area in a bid to adapt to the forthcoming regulations. A recent publication highlights that 68% of Runes are in the negative — leading to questions about whether they are truly an upgrade for Bitcoin.
Published At
5/17/2024 8:11:00 PM
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