Tether (USDT) Stablecoin Will Not Comply with European Union's MiCA Crypto Regulation

European regulation of digital assets, particularly with the MiCA (Markets in Crypto-Assets) framework, poses a significant challenge for stablecoins, especially for Tether. Paolo Ardoino, CEO of Tether, clearly expressed during a conference in Dubai that this regulation is “very dangerous for stablecoins” and that the company does not intend to seek compliance with MiCA.

Ardoino explained the decision by highlighting that complying with the European law would have substantial negative consequences. For instance, the requirement for European banks to maintain at least 60% of reserves in insured deposits within Union banking institutions could risk delisting the USDT stablecoin from European exchanges, drastically reducing its availability and accessibility for users.

After the entry into force of MiCA, scheduled for December 2024, several crypto platforms have already begun removing non-compliant stablecoins. Among these stands out USDT, the stablecoin of Tether, whose value hovers around 149 billion dollars of market cap as of May 1st.

The delisting of USDT could generate a domino effect, limiting the choice of European users and hindering liquidity flows in a market already suffering from strict regulations. Furthermore, Ardoino warns that this regulation could harm European banks involved in providing services for stablecoin, creating a climate of regulatory and financial uncertainty.

A fundamental part of Paolo Ardoino’s criticisms concerns the political and social objectives implicit in the MiCA regulation. According to the CEO of Tether, the regulation might hide a desire to control how people spend through the digital euro.

This interpretation suggests that the European Union, pushing for stricter regulation of stablecoins, might want to favor its central bank digital currency (CBDC) project. Ardoino fears that such a strategy limits the financial freedom of users, hindering the growth and adoption of stablecoins as independent and global instruments.

Contrary to Europe, the situation in the United States appears distinct and not directly influenced by MiCA. Ardoino has ruled out that Tether will apply the same European standard overseas, stating that the USA will require a different type of product. This distinction implies that each territory will explore different ways to integrate or regulate stablecoins.

Moreover, Ardoino highlighted the importance of continuous education towards Bitcoin and cryptocurrencies in general. He sees Bitcoin as a crucial resource that will influence the future choices of financial companies. This approach emphasizes the educational role that crypto companies must have to guide investors and institutions in an increasingly complex ecosystem.

A key aspect of Tether’s global presence is its significant exposure in US Treasuries, that is, US government securities. Ardoino revealed that Tether holds about 120 billion dollars in these secure financial instruments, a figure that adds solidity to the financial structure of the stablecoin.

In parallel, the overall market cap of Tether, amounting to approximately 149 billion dollars as of May 1st, confirms the leadership of the stablecoin in the global crypto landscape. These data strengthen Tether’s position as a point of reference in the sector, despite the growing regulatory challenges.