The European Union’s Markets in Crypto-Assets (MiCA) regulation is a landmark step in global crypto governance. As the first comprehensive framework for crypto oversight by a major economic bloc, it zeroes in on stablecoins like Tether’s USDT. But as MiCA begins to reshape Europe’s crypto landscape, Tether is opting out—and it’s not staying quiet about it.
What MiCA Requires From Stablecoins
MiCA sets strict rules for any stablecoin traded in the EU. Here’s a breakdown of the key compliance points:
1. Mandatory licensing as an EMI
To issue a stablecoin in Europe, issuers must register as an electronic money institution (EMI)—a license traditionally used by fintech companies offering digital wallets or prepaid cards. It’s a costly and time-consuming process.
2. Majority of reserves in EU banks
For “significant” stablecoins like USDT, 60% of reserves must be held in European banks. This aims to ensure financial stability within the region.
3. Full transparency is essential
MiCA requires issuers to publish white papers, conduct audits, and provide regular reserve disclosures. This level of transparency is new for some stablecoin issuers.
4. Non-compliance leads to delisting
Stablecoins that don’t meet MiCA standards are being delisted from EU exchanges. For instance, Binance and Kraken have removed USDT trading pairs for users in the European Economic Area (EEA).
The European Securities and Markets Authority (ESMA) confirmed that users can still hold or transfer USDT, but it can’t be listed or marketed within the EU.
Why Tether Rejects MiCA Compliance
Tether’s leadership has openly criticized MiCA, arguing that the rules could cause more harm than good. Here’s why:
The 60% banking rule could create new risks
CEO Paolo Ardoino warns that forcing stablecoins to rely on traditional banks could backfire. If European banks face liquidity crises during large redemptions, stablecoins like USDT could also collapse.
Instead, Tether holds most of its reserves in U.S. Treasuries, which it views as safer and more liquid.
Concerns over privacy and centralization
Tether has also criticized the EU’s push for a digital euro, suggesting it could lead to financial surveillance and control over individual spending. Despite promises of privacy-preserving features, Tether remains skeptical.
Tether’s user base is outside the EU
Tether argues that its core users are in countries like Turkey, Argentina, and Nigeria, where unstable currencies and inflation drive demand for USDT. MiCA’s regional focus doesn’t align with these global needs.
Did you know? Over 16% of Turkey’s population is active in crypto, with stablecoins like USDT serving as protection against lira devaluation.
The Impact of Non-Compliance
USDT is being removed from EU exchanges
Binance delisted USDT trading pairs by March 2025. Kraken followed suit, also removing EURT and PayPal’s PYUSD. Other platforms are likely to do the same.
Fewer options for EU users
European users can still withdraw or transfer USDT, but can’t trade it on regulated platforms. Alternatives like USDC and EURC, which are MiCA-compliant, are gaining traction.
Liquidity in the EU may suffer
USDT is the most traded crypto globally, with over $20.6 trillion in 2024 transaction volume. Its removal from EU markets could lead to wider spreads, reduced liquidity, and increased volatility.
Did you know? Tether boasts over 400 million users and outpaces Bitcoin in daily trading volume.
Tether Is Doubling Down Elsewhere
While Europe tightens the rules, Tether is expanding into crypto-friendly regions:
New HQ in El Salvador
Tether has secured a digital asset license in El Salvador and is establishing a real headquarters there. It’s a strategic pivot to a country where crypto is not just accepted but promoted.
Investing profits beyond crypto
After earning $5 billion in profits in early 2024, Tether is investing in:
- AI: Through Tether Evo, the firm backs companies like Northern Data Group and Blackrock Neurotech, and launched Tether AI, a decentralized AI platform.
- Infrastructure and AgTech: Investments in companies like Adecoagro support sustainable farming and renewable energy.
- Media and communications: Signaling expansion into mainstream industries.
MiCA and the Global Crypto Regulation Maze
Tether’s rejection of MiCA reflects a deeper challenge: fragmented crypto regulations worldwide.
Regulatory arbitrage in action
Tether is a master of regulatory arbitrage—setting up operations where rules are favorable. If the EU cracks down, Tether moves to El Salvador.
But this strategy raises concerns: can global rules protect users if major players simply exit jurisdictions they don’t like?
Crypto policy is globally inconsistent
The EU wants transparency and strict oversight. The U.S. remains indecisive. Asia is split, with Hong Kong supporting crypto while China remains restrictive. Latin America is leaning into crypto for financial inclusion.
Final Thought: Betting Against Brussels?
Tether’s MiCA exit is more than a policy disagreement—it’s a bet that the future of crypto won’t be written in Brussels, but in places where innovation still trumps regulation.
As stablecoins become central to global finance, the tension between compliance and access, control and freedom, will only grow.
