Tether At Risk of Delisting on Coinbase Over MiCA Compliance

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In a move that could reshape Europe’s stablecoin landscape, Coinbase Global Inc. made a shocking announcement earlier today. The global exchange revealed its plans to delist all unauthorized stablecoins from its trading platform across the European Economic Area (EEA) by the end of this year.

This bold decision directly responds to the European Union’s upcoming crypto regulation, Markets in Crypto Assets (MiCA). The MiCA regulatory framework signed last year will be fully implemented by December 31, 2024.

The MiCA Effect on Stablecoin Issuers

MiCA is poised to bring sweeping changes to the European crypto ecosystem. On June 30, the first phase of MiCA regulations came into effect, specifically targeting stablecoin issuers.

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Under the new framework, stablecoin issuers must obtain e-money licenses to operate within the EEA. This legal shift aims to ensure consumer protection and mitigate systemic risks in the fast-evolving crypto sector. Coinbase, known for its emphasis on regulatory compliance, is taking the lead in ensuring it meets MiCA’s demands ahead of schedule.

In an interview, Coinbase’s spokesperson revealed that the exchange intends to restrict stablecoin services to non-compliant EEA users by December 30, 2024.

Speculatively, Tether Holdings’ native token, USDT, is at risk of being delisted. The stablecoin issuer could soon be inaccessible to European users via Coinbase because it has yet to secure the necessary permissions

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The Impact on Tether and USDT’s Dominance

Tether’s USDT, the world’s largest stablecoin by market cap, has long held the lion’s share of the global stablecoin market. However, Europe’s lack of regulatory clearance has jeopardized the token’s future, especially with MiCA’s imminent rollout.

The looming restrictions are not exclusive to Coinbase. Other exchanges like OKX, Bitstamp, and Uphold have already started limiting access to some stablecoins, including USDT, in anticipation of the regulatory overhaul. Tether, meanwhile, has remained tight-lipped, declining to comment on whether it will seek the necessary permissions to maintain its presence in Europe.

The Rise of Alternative Stablecoins

As MiCA tightens the noose around non-compliant stablecoins, alternatives like Circle Internet Financial Ltd.’s USDC are emerging as clear beneficiaries.

Coinbase plans to offer its users the option to convert unauthorized stablecoins into EU-compliant ones, such as USDC. The timing of this seems more appropriate as USDC is already recognized as one of the most compliant and trusted stablecoins globally.

The stablecoin space could also see new challenges from companies like Robinhood Markets Inc. and Revolut Ltd. Both firms are reportedly exploring the launch of their own stablecoins.