The European Union (EU)’s Markets in Crypto Assets (MiCA) Regulation took effect on 30 December 2024. MiCA is the first European Union regulation that governs the cryptocurrency market. It sets clear rules for the issuance and management of crypto assets, including stablecoins, and mandates issuers to obtain licenses and comply with standards of organization and governance.
However, Tether's USDT, the world’s largest stablecoin, has not yet received certification for MiCA compliance. European regulators have offered no clarification on whether the stablecoin meets the new regulatory standards, which leaves uncertainty over USDT's future within the EU's single market. What is MiCA, and how can it impact the destiny of the major stablecoin issuer? Some details are in the article.
About MiCA
MiCA categorizes stablecoins into two main types: asset-referenced tokens and electronic money tokens.
- Asset-referenced tokens are assets that ensure a stable value by referencing one or more currencies, assets, or rights, excluding “e-money tokens.”
- Electronic money tokens (e-money tokens) are assets that ensure a stable value by referencing a single official currency. These include “algorithmic stablecoins,” which rely on protocols to adjust supply based on demand to ensure stability relative to a currency or assets.
MiCA mandates stablecoin issuers to release a white paper about their projects and hold sufficient reserves to support their assets. It is also required for token issuers to obtain a license to be able to continue their operations in the EU.
In general, the regulation enforces consumer protection measures, such as transparency in advertisements and mandatory customer service provisions. Another important requirements is keeping at least 30% of the reserves in low-risk commercial banks in the EU.
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, issued its final reports on MiCA on 17 December 2024. This report includes regulatory technical standards and guidelines in preparation for the full implementation of MiCA.
The Impact of MiCA on Tether (USDT)
MiCA’s enforcement introduces restrictions on stablecoins that fail to meet its regulatory requirements. The “restricted assets” currently include Tether (USDT), Pax Dollar (PAX), PayPal USD (PYUSD), Gemini Dollar (GUSD), GMO Trust’s GYEN, and DAI from the MakerDAO protocol.
As of January 2025, Tether’s global market capitalization is approximately $137.3 billion. USDT accounts for 78.32% of the global stablecoin market. As the largest stablecoin by market capitalization, USDT’s status in the European market creates uncertainties regarding its compliance with MiCA standards. Although intended to stabilize and legitimize the crypto market, USDT currently does not meet MiCA’s operational requirements for stablecoin issuers.
As some experts note, meeting these requirements would be economically challenging for big stablecoin issuers because, according to the new law, they shall keep at least 30% of their reserves in low-risk commercial banks within the EU. Meeting this demand means disrupting the entire crypto ecosystem.
The USDT Future Under the MiCA Regulation
Tether CEO Paolo Ardoino has issued a sharp critique of the regulation in a post on X. “MiCA is nothing but a massive gift to the traditional banking system. Forcing stablecoin issuers to hold >30% of their liquidity in banks only ensures more profits for the legacy players. It’s regulation designed to benefit the old system, not innovation,” Ardoino said.
Despite this criticism, Tether has acknowledged the regulation and expressed a willingness to meet its requirements. To align with MiCA, the company announced plans to discontinue its euro-pegged stablecoin, EURT, and offered EURT holders the opportunity to redeem their assets by 27 November 2025.
In a move that appears strategic for its position in the European market, Tether has also invested in StablR, a European stablecoin company and issuer of the euro and U.S. dollar stablecoins EURR and USDR. StablR secured an electronic money institution (EMI) license in Malta in July 2024, ensuring its compliance with EU regulations, including MiCA.
However, Tether’s decision not to comply with MiCA comes with significant risks and challenges. Non-compliance may expose the company to regulatory actions, fines, or even bans on USDT within the EU.
So, for now, some crypto exchanges, such as Coinbase, eliminated USDT from all offerings for EU citizens, while others, such as Binance, imposed restrictions on operations with USDT (users can store USDT in their wallets, sell USDT for regulated cryptocurrencies and fiat currencies, Spot trading with USDT remains available, among other restrictions). Other major crypto exchanges like KuCoin, Bitget, and OKX allow P2P purchases of USDT with EUR. Finally, some exchanges, such as Bybit, are not planning to impose any limitations on USDT trading or delist the coin. Instead, they limit the EU citizens’ participation in events organized by the exchange.
Among this turmoil, the following questions may worry the investors.
Is it legal for EU citizens to buy, sell, and hold USDT?
Yes, there are no issues here, as MiCA regulates the issuance, offering, use, and provision of services related to crypto assets, including trading platforms and custodial storage services. In other words, it concerns the provision of services related to crypto assets rather than the ownership of USDT by any individual or company.
Where can one buy USDT?
Just like before, USDT can be purchased on various trading platforms (exchanges). However, in the future, regulators may restrict their operations in Europe if they lack the necessary licensing. As an option, USDT can be bought and sold on decentralized exchanges.
May operations with USDT be banned, and if so, when will it happen?
Regulators do not give a universal reply to this question. It will depend on the Member States. While some may impose the new requirements immediately, other Member States have the option of granting entities already providing crypto-asset services in their jurisdictions up to an additional 18-month “transitional period” during which they may continue to operate without a MiCA license (also referred to as a ‘grand-fathering clause’). In different countries, this transitional period differs.
At Bullperks, we monitor the situation, and we have the technical capability to offer raises in USDC BEP-20 should that ever be required.
What’s Next for USDT?
Here is how Kirill Bavykin, Corporate Compliance Manager at BullPerks, describes the impact of MiCA on the future of stablecoins in general and USDT specifically: “MiCA establishes regulatory requirements for crypto-asset issuers and service providers in the EU, replacing national laws and providing greater consumer protection. While it benefits consumers by enhancing trust and security in crypto services, market participants may face challenges adapting to the new rules. MiCA will also affect stablecoins like Tether USDT, requiring compliance with transparency, audit, and governance standards. Failure to meet these standards could limit Tether's use in the EU, while compliance could boost its credibility. The impact on Tether will depend on how well it adapts to the new regulatory environment and faces competition from EU-native stablecoins”.
USDT’s potential noncompliance with MiCA requirements is crucial for the global stablecoin market. While its immediate impact is felt in Europe, the regulatory shift may influence global stablecoin preferences.
The global market is undergoing significant changes, and regulations are constantly evolving. Changes may occur since the publication of this article. This could affect the relevance of the information provided. We encourage staying updated on the latest regulatory developments, particularly within the context of the EU.
