Coinbase Removes USDT from Platform Due to MiCA Regulation

In December, crypto-exchange Coinbase removed Tether’s USDT from its platform. The exchange made this decision citing non-compliance with the European crypto-regulation MiCA (Markets in Crypto Assets Regulation), one of the strictest crypto standards that came into effect on December 30.

As one of the largest stablecoins pegged to the US dollar based on market capitalization, Tether’s USDT enjoyed dominance for a long time. This changed recently when the market began to adapt to the MiCA guidelines.

Circle’s USDC, the largest MiCA-compliant stablecoin, could gain more market share following the removal of USDT, according to a recent report from Kaiko.

Despite Coinbase’s action, the regulator and advisor for MiCA compliance, ESMA (European Securities and Markets Authority), has not yet issued an official statement on the compliance status of USDT.

Reportedly, Binance and other exchanges have limited some USDT services for EU users. In a recent statement from Binance, it was stated:

“Binance announced its approach to non-MiCA stablecoins in June 2024, and there will be no changes until further notice. USDT remains supported for custody; deposits and withdrawals are not affected. We encourage users to use USDC and EURI, as these are MiCA-compliant stablecoins.”

Is Tether non-compliant or FUD?

According to Juan Ignacio Ibanez, a technical member of the EU crypto compliance group MiCA Crypto Alliance, the silence of regulators does not imply that USDT is compliant. However, some industry insiders noted that only Coinbase has removed USDT. Samson Mow, CEO of BTC advisory firm Jan3, called the removal a form of ‘Tether FUD’. He said:

“Apart from Coinbase (which is invested in Circle), no other exchange plans to remove USDT in the short term for European users. Local European regulators have a transition period of more than 12 months.”

The ongoing European restructuring has caused the market capitalization of USDT to drop from $141 billion to $137 billion. Other insiders warned that the removal of USDT could affect liquidity in European markets and strengthen American dominance.