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Kraken is considering withdrawing support for USDT, the largest stablecoin, in the EU if it fails to comply with the upcoming MiCA rules. The exchange aims to align with the regulations governing cryptoasset markets, set to take effect this year.
Since last year, the European Banking Authority (EBA) has urged stablecoin issuers to follow “guiding principles” to operate in Europe. However, the EBA has yet to finalize these guidelines, which include restrictions on stablecoins offered by issuers such as Tether.
Kraken Considers Removing USDT Support in the EU
Kraken highlighted that it is analyzing all potential scenarios in Europe, including the possibility of delisting USDT if it becomes unsustainable. The exchange continuously reviews the regulatory positions of European Union authorities.
“What we’re clear about is that the scope of the type and number of stablecoins that are offered today in Europe are unlikely to be able to be offered going forward. At some point, there’ll be a cut off at which that won’t be possible. A lot of that will depend on which assets are being registered within the European Union under the e-money regime,” said Marcus Hughes, Kraken’s global head of regulatory strategy.
Kraken is one of many exchanges expressing concern about the legal status of stablecoins in Europe. In March, OKX, another major exchange, suspended support for USDT, citing regulatory uncertainties. This move, initially preventive, now appears to be part of a broader trend in the EU.
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Tether suggested that exchanges should focus on euro liquidity for European clients and keep USDT as an option. Tether CEO Paolo Ardoino expressed concerns about MiCA’s requirements, emphasizing the need for stablecoins to maintain 100% reserves in treasury bills to avoid bank failures.
“Stablecoins should be able to keep 100% of reserves in treasury bills, rather than exposing themselves to bank failures keeping big chunk of reserves in uninsured cash deposits. We hope to continue the dialogue with EU regulators to address those concerns,” Ardoino commented.
Read more: 9 Best Crypto Wallets to Store Tether (USDT)
In 2023, the EBA noted the increasing issuance of stablecoins and emphasized the need for good governance and risk management rules, even before MiCA‘s implementation. The boom in stablecoin use in the EU primarily facilitates trading other digital assets.