Could Uphold’s Tether Delisting Signal Trouble for USDT in Europe?

Popular New York-based cryptocurrency exchange Uphold has announced the delisting of six stablecoins in response to the EU’s upcoming MiCA regulation, including Tether (USDT) — the largest of the group.

This decision is in line with the Markets in Cryptoassets (MiCA) regulation, which comes into full effect on June 30, 2024. Passed into law in May 2023 and partially enacted a month later, MiCA requires all digital assets to adhere to its comprehensive regulations.

However, it raises concerns about the future of USDT in the region.

Implications of MiCA System on Tether (USDT)

According to Tim Wang, COO of Elixir, the short-term effects could be market disruption for liquidity and trading markets due to the dominance of USDC and USDT on centralized exchanges.

In a special statement to CryptoPotatoThe Elixir CEO stated that a medium-term solution would likely be needed unless the EU decides it no longer wants to participate in facilitating cryptocurrency markets altogether.

Wang also noted that USD-backed stablecoins and assets remain the primary form of collateral in cryptocurrency markets as Euro-based stablecoins have failed to gain much adoption at all.

New EU cryptocurrency laws impose strict regulations on fiat-backed stablecoins and e-money tokens that exceed a specific adoption threshold as defined by seven quantitative and qualitative indicators. This system places supervision on the responsibility of the European Banking Authority rather than national authorities.

Key provisions of MiCA include 1:1 support for fiat-based stablecoins with liquid reserves, separation of custodial from reserve assets, and ban on algorithmic stablecoins.

Uphold isn’t the only one who has it He collapsed under pressure. In an effort to ensure compliance and stay out of regulatory issues, several major cryptocurrency exchanges such as Kraken, Binance, and OKX have made certain changes to their stablecoin listing policies.

The dominance of stablecoins in play

While the EU’s upcoming MiCA regulations could set a precedent affecting cryptocurrency regulations in other regions, including the US, the provisions regarding stablecoins may not carry the same weight.

Unlike other regulatory frameworks that originated in Europe and were adopted in the United States, such as the General Data Protection Regulation (GDPR) that evolved into the CCPA in California, Wang believes that regulating stablecoins will be more complex as “stablecoin dominance” will increasingly become an issue. Politically controversial, which is represented by former President Donald Trump’s recent meetings with Bitcoin miners in the United States to discuss future mining in the country.

“This could easily become the case as is the case with the US dollar versus other currency-denominated stablecoins.”