Kraken May Drop USDT in the EU Due to New MiCA Rules

Kraken May Drop USDT in the EU Due to New MiCA Rules

Blockchaineurope

By Jakub Lazurek

18 May 2024 (about 1 month ago)

2 min read

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Kraken may end USDT support in the EU due to new MiCA regulations, reflecting broader trends of exchanges reevaluating stablecoins under regulatory scrutiny.

Kraken is considering ending support for USDT in the EU as new MiCA regulations take effect this year, reflecting a broader trend of exchanges reassessing stablecoin listings under regulatory scrutiny. MiCA regulations, effective this year, prompt exchanges like Kraken to reevaluate their offerings. Tether and exchanges debate impacts, particularly euro liquidity and reserve requirements. Kraken's potential delisting of USDT underscores its effort to comply with new rules.

The European Banking Authority (EBA) has advised stablecoin issuers to follow “guiding principles” for operating in Europe, but final guidelines are still pending. Kraken reviews regulatory positions of EU authorities regularly, including removing USDT if unsustainable under new rules. Marcus Hughes, Kraken’s global head of regulatory strategy, noted that stablecoins currently offered in Europe might not remain available.

Other exchanges share concerns about stablecoins' legal status in Europe. In March, OKX suspended USDT support due to regulatory uncertainties. Tether suggested focusing on euro liquidity and keeping USDT as an option. CEO Paolo Ardoino emphasized the need for stablecoins to hold 100% reserves in treasury bills to avoid bank failures.

The EBA noted the rise in stablecoin issuance in 2023, emphasizing the need for good governance and risk management even before MiCA’s implementation. Kraken's cautious approach aims to comply with MiCA regulations, which create a unified framework for crypto-assets across the EU, addressing consumer protection, market integrity, and financial stability.

Stablecoins are crucial in the crypto market for liquidity and quick transfers. However, stricter regulations focus on robust reserve management and transparency. Kraken’s decision on USDT support in the EU depends on final EBA guidelines and MiCA enforcement. The exchange prepares to meet these requirements to remain compliant and serve European customers effectively.

As MiCA is fully implemented, exchanges and stablecoin issuers monitor developments and engage with regulators to shape the future regulatory landscape, impacting stablecoin availability in the EU. In summary, Kraken’s potential withdrawal of USDT under new MiCA regulations highlights exchanges reassessing stablecoin listings under scrutiny, reflecting its commitment to compliance and adaptation.

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