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As another key deadline for MiCA compliance goes by, Tether has defied its critics once again, as its stablecoin remains available on almost all major exchanges in Europe.
On December 30, 2024, the deadline passed for the application of the EU’s Markets in Crypto-Assets (MiCA) regulation to be applied to all crypto-asset service providers (CASPs).
This was the second key deadline of 2024, following June 30, when MiCA’s provisions on stablecoin issuance came into effect.
Both occasions were accompanied by widespread speculation that Tether would be delisted from European exchanges, and both times, this proved incorrect.
To date, the only major exchange to delist Tether’s USDT stablecoin for European users is Coinbase, which implemented its new MiCA-era stablecoin standards on December 13, 2024.
In addition to USDT, Coinbase named PayPal’s PYUSD and Paxos’ gold-backed token, PAX, among its “MiCA-restricted assets”.
In their place, Coinbase is now promoting Circle’s USDC and EURC stablecoins as “MiCA-compliant” alternatives.
Ahead of its December 13 deadline, Coinbase instructed its users to either convert their MiCA-restricted stablecoins to USDC or EURC, or transfer them off the Coinbase platform to a self-custody wallet.
“As the industry leader in trusted, compliant crypto products and services, we aim for the highest standards for regulatory compliance and will continue the same with respect to MiCA,” a Coinbase spokesperson told Vixio.
“We regularly review the assets we make available to customers on our platform to ensure we are meeting regulatory requirements, and will assess re-enabling services for stablecoins that achieve MiCA compliance on a later date.”
At Binance, the largest exchange in Europe, users have also been encouraged to switch to USDC, although USDT remains available.
On December 11, Binance announced that it had entered a new partnership with Circle to expand its support for USDC.
Through the partnership, Binance said it will make USDC “more extensively available” to its 240m users across its full suite of products and services globally.
The aim is for Binance users in all jurisdictions to enjoy “seamless access” to USDC for trading, saving and payments applications, it said.
In addition, Binance will adopt USDC as the dollar stablecoin for its own corporate treasury — a “powerful signal” that financial applications are increasingly moving on-chain, said Circle.
Since the Binance-Circle partnership was announced, USDC’s total market cap has risen by $4bn, while USDT’s has fallen by around $3bn from its peak.
In June 2024, Circle became the first global stablecoin issuer to become MiCA-compliant, when it announced that it had obtained an electronic money institution (EMI) licence in France.
Under MiCA, the only stablecoins that may be offered to the public are those issued by credit institutions or holders of an EMI licence issued within the European Economic Area (EEA).
'Grandfathering' delays work in Tether’s favour
Another factor that is helping to ensure that Tether remains available in Europe is the “grandfathering” arrangements that have been entered into by European jurisdictions.
On December 17, the European Securities and Markets Authority (ESMA) published a statement on MiCA transitional measures.
The statement noted that CASPs that provided services in accordance with applicable law before December 30, 2024 may continue to do so until July 1, 2026, or until they are granted or refused an authorisation under MiCA — whichever is sooner.
The grandfathering option has proved incredibly popular, with almost all European jurisdictions opting for a further stay on MiCA enforcement of between six and 18 months.
Tether’s defenders, including Samson Mow, CEO of the influential Bitcoin tech company JAN3, have pointed to the grandfathering arrangements to explain why most exchanges are in no rush to delist Tether.
In December, Tether CEO Paolo Ardoino reposted much of this sympathetic commentary on his X account.
He also blamed Tether’s competitors for manufacturing a campaign of “disinformation”.
“Reminder: the paid shill armies that keep attacking Tether since years [sic] are the same that keep attacking Bitcoin to promote some alternative useless tech,” he said.
“Bitcoin and Tether are standing in their way. We're unstoppable together.”
Tether’s qualms with MiCA
The continued availability of USDT is a key test of MiCA’s credibility, given that Tether has made clear that it will not attempt to comply with the regulation in its current form.
As covered by Vixio, Ardoino has said on multiple occasions that MiCA’s rules on management of reserve assets are both misguided and overly burdensome for issuers.
“At Tether, what particularly bothers us about MiCA are the very strong constraints on how you can manage your reserves,” he said.
“If you are a small stablecoin issuer, 30 percent of your reserves must consist of cash deposits at a bank. In the case of stablecoins of systemic size like ours, this requirement rises to 60 percent.”
However, it is also true that Tether would be unable to comply with these requirements even if it tried to, given its lack of audited financial statements.
Since Tether’s founding in 2014, it has struggled to access banking services. This struggle continues today, with its known banking partners consisting only of Bahamas-based institutions (such as Britannia Bank, Deltec Bank and Capital Union Bank).
Lack of banking services was one of the key factors that led Tether to ditch cash deposits as its main reserve asset and switch to US Treasury bills instead.
From 2021 onwards, this was achieved with the help of US firm Cantor Fitzgerald, a primary dealer in US Treasuries, whose CEO, Howard Lutnick, has been nominated to serve in the Trump Cabinet.
