Kraken, a popular cryptocurrency exchange, is considering ending its support for stablecoin Tether (USDT) in the European Union due to the upcoming implementation of the Markets in Crypto-Assets Regulation (MiCA). The regulation will be rolled out in two phases, with rules for stablecoins and e-money tokens taking effect on June 30, 2024, and rules for crypto service providers coming into play on December 30, 2024.
In response to Kraken’s announcement, Tether stated that it expects exchanges to prioritize EUR liquidity for European customers while still offering USDT as a solution for on-ramp and off-ramp transactions.
Although the MiCA regulation does not explicitly mention “stablecoin,” it includes asset-referenced tokens (ARTs) and e-money tokens (EMTs), both of which fall under the category of stablecoins according to the European Banking Authority (EBA). The EBA may classify certain stablecoins, such as USDT, as “significant” based on specific criteria, imposing a daily transaction limit of 200 million euros.
Tether’s CEO, Paolo Ardoino, expressed criticism towards the European regulation, stating that the company does not intend to be regulated under MiCA. He specifically mentioned the requirement for stablecoin reserves to consist of 60% cash deposits across multiple banks, highlighting the difficulty in finding banks willing to engage in such business. As of now, USDT has a market capitalization of $111.2 billion and a global trading volume of $61.24 billion.
OKX, another cryptocurrency exchange, already made a similar move in March by discontinuing support for USDT trading pairs in the European Economic Area in order to comply with the forthcoming regulations.
In other news, a magazine reports that 68% of Runes, a type of cryptocurrency, are experiencing losses. The article questions whether Runes are truly an upgrade for Bitcoin.