Kraken, a US-based crypto exchange, is considering delisting Tether’s USDT stablecoin within the European Union as the EU prepares to implement new regulations under Markets in Crypto-Assets (MiCA) starting in July. These forthcoming rules are expected to affect USDT, the most widely traded cryptocurrency.
Potential Implications of Kraken’s Decision
The European Banking Authority (EBA) is finalizing MiCA regulations, which will impose limitations on the sale of stablecoins to EU investors. Traders often use stablecoins like USDT to transfer digital assets between exchanges or hedge against price fluctuations. Kraken’s global head of regulatory strategy, Marcus Hughes, mentioned that they are exploring various scenarios, including delisting tokens like USDT based on regulatory clarity.
On the other hand, Tether, the issuer of USDT, responded to Kraken’s considerations by emphasizing the importance of maintaining USDT as a solution for European customers. However, Tether’s CEO expressed reservations about complying with MiCA rules in the near future.
Regulatory Challenges and Considerations
Other exchanges, such as OKX, have already restricted EU users from trading cryptocurrencies with USDT earlier this year, signaling a broader industry shift. The MiCA regulations will necessitate that issuers of asset-linked tokens like USDT obtain licenses from a national financial authority in an EU member state by June 30 and adhere to stricter governance standards.
As Kraken evaluates its options amidst evolving regulations, the exchange is also in the final stages of selecting a new European headquarters post-MiCA. France and Ireland are emerging as favored locations among Kraken’s competitors like Coinbase, Binance, and Gemini.
Potential Consequences of USDT Delisting
If Kraken proceeds with delisting USDT in Europe, it could disrupt trading for its EU customers, leading to reduced liquidity, higher price volatility, and decreased trading volumes. Customers reliant on USDT may need to adapt to alternative stablecoins or fiat options, introducing complexity to their transactions.
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