MiCA to take effect by the end of the month, Tether CEO expresses concerns about stablecoin operational risks.

Following Binance's announcement to restrict the use of unauthorized stablecoins in Europe by the end of this month, Paolo Ardoino, CEO of Tether, the world's largest stablecoin issuer, expressed concerns about the impact of the EU's Markets in Crypto-Assets Regulation (MiCA) on stablecoins.

Will USDT lose a significant market? EU's MiCA stablecoin regulations set to take effect: How will Binance ensure compliance?

MiCA is Launched, Will USDT Lose the European Market?

Starting from June 30, 2024, MiCA stipulates that only electronic money institutions (EMIs) and credit institutions such as banks will be able to issue and provide stablecoin services within the European Economic Area (EEA). This means that many existing stablecoins will be classified as "unauthorized stablecoins" and subject to corresponding restrictions.

OKX exchange has already delisted USDT trading pairs in the European region, and Kraken is reportedly considering a similar move.

Binance CEO Richard Teng clarified on X on Monday:

Binance will not immediately delist any unauthorized stablecoins but will restrict their availability to European users only on certain products. We will soon share updates on regulated stablecoins.

However, Binance's announcement did not mention Tether's USDT.

Tether Concerns Regarding MiCA Stablecoins

According to The Block, Tether's Chief Technology Officer Paolo Ardoino expressed concerns that Tether has been actively participating in regulatory technical standard negotiations for the past few months but still worries that MiCA includes some problematic requirements.

These requirements not only make the work of stablecoin issuers extremely complex but also make stablecoins approved by the EU extremely fragile and operationally riskier.

Ardoino also stated that Tether has had extensive contact with European exchange counterparts regarding these requirements, including ongoing listings of USDT and other Tether tokens, as well as interpretations of key regulatory terms.

Binance also acknowledges that the upcoming regulations may pose challenges. In a blog post, Binance stated:

Currently, there are few regulated stablecoins with limited liquidity, which may not be sufficient to support the demands of the entire industry.

However, Binance anticipates that in the coming months, more regulated stablecoins will enter the market, leading the market to eventually shift entirely towards regulated stablecoins over time, ensuring the goals of MiCA are achieved.