A new set of rules for digital assets, set to start in July, might lead to the removal of the US dollar-pegged stablecoin USDT from Kraken's European trading platform.

Kraken Considers Delisting USDT in Europe

Kraken, a leading cryptocurrency exchange, is thinking about delisting USDT from its platform in the European Union. Marcus Hughes, Kraken's global head of regulatory strategy, confirmed in an interview on Thursday that the company is reviewing this decision.

"We're preparing for all possible scenarios, including the potential need to delist certain tokens like USDT," Hughes said. "It's an ongoing review, and we'll make firm decisions as the situation becomes clearer."

EU's Commitment to Crypto Regulation

The European Union is showing its dedication to regulating the digital asset sector by introducing the Markets in Crypto-Assets (MiCA) regulation, which is scheduled to launch in July 2024. This new framework has been in the works for a while and aims to regulate stablecoins like USDT more strictly, placing them under the supervision of the European Banking Authority (EBA).

Stablecoins are typically used by investors to transfer digital assets between exchanges. However, the MiCA regulation imposes restrictions on these stablecoins, which will now be supervised by the EBA and the European Securities and Markets Authority (ESMA). This push for tighter regulation is partly due to the collapse of Terra Luna’s UST in 2022.

Tether's Response to MiCA

In response, Tether stated that exchanges should focus on providing EUR liquidity for European customers while keeping USDT available for transactions. Tether’s CEO, Paolo Ardoino, has raised concerns about certain aspects of the MiCA regulation and its requirements. Although Tether is willing to work with regulators, Ardoino mentioned that the company does not plan to be regulated under MiCA for now.

Industry Reactions

Other exchanges, such as OKX, have already started removing USDT from their European platforms in preparation for MiCA. While MiCA won't take effect until 2025, these exchanges are proactively adjusting to the upcoming regulations.

Conclusion

As Kraken considers delisting USDT in Europe due to the new MiCA regulations, the crypto industry watches closely. The outcome of this review could significantly impact how stablecoins are used and regulated in the European Union.