Crypto alert: Tether’s USDT delisting – What every investor must know

Coinbase delisted USDT as MiCA guidelines became effective.
USDT market cap has dropped by $4B as insiders called the delisting a ‘Tether FUD.’

As a seasoned analyst with years of experience navigating the tumultuous waters of the cryptocurrency market, I must say that the recent events surrounding Tether (USDT) and its delisting from Coinbase due to MiCA regulations are not surprising but rather indicative of the evolving landscape in the crypto industry.

The delisting has indeed caused a stir, with the USDT market cap dropping by a significant $4B, raising questions about its compliance status with EU regulations. However, it’s essential to remember that regulatory clarity is often slow in coming, and this silence from ESMA doesn’t necessarily mean USDT is compliant but rather that it may not be yet.

It’s interesting to note that while Coinbase has taken a firm stance on this matter, other exchanges like Binance are still supporting USDT, albeit with some restrictions for EU users. This inconsistency underscores the complexity of the crypto market and the challenges regulators face in maintaining balance and consistency across platforms.

In the grand scheme of things, the delisting could have far-reaching implications, particularly for liquidity in the EU markets and potentially reinforcing U.S. dominance. However, as someone who’s seen many ups and downs in this market, I’d like to remind everyone that the crypto world is known for its volatility and unpredictability – so, remember to always HODL on tight, but not too tight! After all, who would have thought that a digital currency created as a joke could one day become a multi-billion dollar asset?

Around mid-December, the digital currency trading platform Coinbase removed Tether’s USDT, explaining that it failed to meet the requirements set by MiCA (Markets in Crypto Assets Regulation), a stringent EU crypto regulation that took effect on the 30th of December.

Tether’s USDT, one of the biggest stablecoins measured by market capitalization and historically dominant in the space, has seen its reign challenged lately due to the financial industry’s readjustment as they comply with the guidelines set forth by MiCA.

As per a recent Kaiko report, it’s possible that Circle’s USDC, the top stablecoin compliant with the MiCA regulations, may see an increase in market dominance following the delisting of USDT.

Regulator’s silence on USDT status

As of now, the European Securities and Markets Authority (ESMA) – the regulatory and advisory body for MiCA compliance in the EU – has yet to publicly declare whether Tether (USDT) is compliant with their regulations. Coinbase’s actions do not necessarily mean USDT is compliant.

As a researcher, I’ve been observing developments within the cryptocurrency market, and I recently noticed that Binance and other exchanges have allegedly imposed restrictions on certain USDT (Tether) services for European Union (EU) users. To be more precise, part of their official statements suggests this change could be due to compliance issues related to the U.S. regulatory environment.

In June 2024, Binance shared its plan regarding non-MiCA compliant stablecoins, with no changes expected for the time being. Users can still hold USDT for safekeeping; this decision does not impact deposits or withdrawals. We suggest considering USDC and EURI as these are MiCA-compliant stablecoins.

So, does the ESMA’s silence mean USDT could be non-compliant?

As a crypto investor, it seems to me that the lack of clear guidance or approval from regulatory bodies doesn’t necessarily imply that Tether (USDT) is fully compliant. This was recently echoed by Juan Ignacio Ibanez, a technical member of the EU crypto compliance advocacy group MiCA Crypto Alliance, in an interview with Cointelegraph.

While no regulatory bodies have explicitly declared that USDT is non-compliant, it doesn’t automatically imply that it is.

However, some industry insiders pointed out that only Coinbase has delisted USDT.

According to Samson Mow, CEO of consultancy firm Jan3 focusing on Bitcoin for nation-states, calling the removal a ‘Tether Rumor’ or ‘Fear, Uncertainty, and Doubt’ (FUD) about Tether reflects his perspective. In simpler terms, he views this delisting as an unfounded fear or misinformation related to Tether.

Apart from Coinbase, which holds investments in Circle, no other trading platform intends to remove US Dollar Tether (USDt) from their services for European users in the immediate future. Local regulatory bodies in Europe have been granted over a year’s time before any potential action is taken.

The continuous restructuring within the EU is causing a decrease in Tether’s (USDT) market capitalization, which has dropped from $141 billion to $137 billion. Some experts have cautioned that delisting USDT could impact liquidity in European markets and further strengthen the U.S.’s dominance.

2024-12-31 12:07

Regulator’s silence on USDT status

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