USDT’s compliance status with EU’s MiCA regulations remains uncertain despite the lack of regulatory action in the region.

EU Crypto Regulations: Uncertainty Surrounds Tether’s USDt Stablecoin

As the European Union’s (EU) cryptocurrency regulations are set to take full effect on December 30, 2024, there is still a significant amount of uncertainty surrounding Tether’s USDt stablecoin. The regulations, known as the Markets in Crypto-Assets Regulation (MiCA), aim to provide clarity and oversight for the crypto industry.

Coinbase Delists USDt

In mid-December, United States-based cryptocurrency exchange Coinbase delisted Tether’s USDt (USDT) citing compliance with EU’s MiCA regulations. This move has sparked concerns among traders and exchanges about the future of USDT in Europe.

Continued Trading Amid Uncertainty

Despite Coinbase’s decision to delist USDT, many exchanges across the EU continue to trade the stablecoin. Binance, one of the largest crypto exchanges globally, still lists USDT on its platform. In an interview with Cointelegraph, a Binance spokesperson explained that the exchange has announced its approach to non-MiCA stablecoins in June 2024 and will not make any changes until further notice.

MiCA’s Transitional Phase

The EU’s MiCA regulations have a transitional phase that ends on July 1, 2026. This means that entities already providing crypto asset services under applicable law in their jurisdictions can continue to do so during this period. According to ESMA, EU member states will have the option of implementing ‘transitional measures’ that would allow these entities to continue doing so.

Grandfathering Clause

One of the transitional measures mentioned by ESMA is the ‘grandfathering’ clause. This clause allows entities providing crypto asset services in accordance with national applicable laws before December 30, 2024, to continue to do so until July 1, 2026, or until they are granted or refused a MiCA authorization.

Disparate Levels of Protection

As the transitional phase begins, ESMA notes that there will be disparate levels of protection for consumers of crypto-asset services across member states. This may result in a mix of regimes coexisting during this period.

List of Grandfathering Periods

According to ESMA, 10 member states and European Economic Area countries, including France and Estonia, will have an 18-month grandfathering period. Eight other EU jurisdictions, such as Austria, Greece, and Spain, will have a 12-month transition period. Six more, like the Netherlands, will have a six-month grandfathering period.

USDT’s Fate in Europe

While some publications have suggested that European crypto exchanges must delist Tether’s USDt by December 30, 2024, European regulators have not given such guidance. A member of the MiCA Crypto Alliance, Juan Ignacio Ibañez, told Cointelegraph that there is no reason for exchanges like Binance or Crypto.com to delist USDT on the same date as Coinbase.

Waiting Game

Ibañez noted that the question is whether all exchanges will delist USDT at once, whether it will be progressive, or whether some will play a ‘wait-and-see’ game expecting statements from regulators. He added that the ‘wait-and-see’ approach doesn’t make much sense relative to other MiCA requirements.

Conflicting Reports

Cointelegraph approached ESMA for a comment regarding the USDt status under MiCA but did not receive a response at the time of publication. Some online reports suggest that Tether USDt (USDT) will stop trading across Europe after December 30, 2024.

MiCA’s 18-Month Grandfathering Period

The 10 member states and European Economic Area countries with an 18-month grandfathering period under MiCA are:

• France
• Estonia
• Germany
• Italy
• Spain
• Portugal
• Greece
• Slovenia
• Croatia
• Cyprus

These countries will have until July 1, 2026, to continue providing crypto asset services under their national applicable laws.

MiCA’s Simplified Authorization Procedure

In addition to the grandfathering clause, ESMA also provides a list of member states that will implement a simplified authorization procedure for entities already authorized under national applicable law on December 30. These countries are:

• Austria
• Belgium
• Bulgaria
• Czech Republic
• Denmark
• Finland
• Ireland
• Latvia
• Lithuania
• Luxembourg

These countries will have until June 1, 2026, to simplify their authorization procedures for crypto asset services.

MiCA’s Six-Month Grandfathering Period

The six member states with a six-month grandfathering period under MiCA are:

• Netherlands
• Sweden
• Norway
• Iceland
• United Kingdom

These countries will have until March 1, 2025, to continue providing crypto asset services under their national applicable laws.

Conclusion

As the EU’s MiCA regulations take effect on December 30, 2024, there is still uncertainty surrounding Tether’s USDt stablecoin. The continued trading of USDT by many exchanges across the EU has sparked concerns among traders and exchanges about the future of the stablecoin in Europe. The grandfathering clause and simplified authorization procedure under MiCA aim to provide clarity and oversight for the crypto industry, but there are still disparate levels of protection for consumers of crypto-asset services across member states.