American crypto exchange Coinbase will stop providing access to USDT to users from EU countries by the end of the year. What’s going on? What will happen next to the world’s most popular stablecoin? How will this affect USDT holders?
Why Coinbase Doesn’t Like USDT
Coinbase is a trading platform and a commercial company that is trying to make money. It is not all-powerful and tries to operate within a certain legal framework, and in different jurisdictions. To put it simply, Coinbase is obliged to obey the laws of the countries where it operates.
The European Union (EU) has its own set of rules that regulates the circulation of cryptocurrencies — the Markets in Crypto-Assets Regulation (MiCA). It imposes a number of requirements on stablecoins. USDT, like some other cryptocurrencies, does not meet these requirements. In order to avoid problems with European authorities, Coinbase is delisting the Tether stablecoin for customers from the Eurozone. Users from other regions of the world can continue to use the coin; the changes will not affect them.
But what exactly is wrong with Tether? And why is Coinbase the one doing the delisting? Is USDT MiCA compliant on other crypto exchanges?
MiCA Requirements for Stablecoins
Specifically, the requirement for USDT is that the issuer (i.e. Tether) needs to keep 60% of its reserves in European banks. Given that there are currently about $135 billion worth of tokens in circulation, that only $81 billion needs to be transferred to European credit institutions. Tether is not going to do this yet.
It is worth noting that reserve requirements are not the only problem with stablecoins. Companies that issue such assets must have special licenses – credit institutions or electronic money institutions. At the same time, MiCA does not use the term “stablecoin”. All assets there are divided into:
1. Asset-referenced tokens are stablecoins for gold, silver and other commodities.
2. E-money tokens are stablecoins that are tied to a specific fiat currency.
3. Other tokens.
European legislation also requires any stablecoin to have a so-called “White Paper”, i.e. technical documentation describing the concept of the project. It must spell out in detail the smallest details: what technology underlies the cryptocurrency, who issued it, what are the associated risks. In addition, this document must be approved by a government agency. Plus, all companies involved in the release of stablecoins must have a well-developed risk management system.
For tokens that are not pegged to the euro, there are limits on the number of transactions per day – 1 million coins or, if in money, 200 million euros.
In addition, companies launching stablecoins must periodically report to institutions such as the European Banking Authority and the European Securities and Markets Authority.
In general, there are many requirements, and it is difficult to comply with them. However, there are stablecoins that comply with MiCA. For example, USDC of the American company Circle.
Reaction of crypto exchanges to MiCA
Coinbase is far from the first exchange to impose certain restrictions on stablecoins. Another American platform, New York-based Uphold, delisted USDT, FRAX GUSD, USDP, and TUSD for Europeans back in July 2024.
Seychelles-based OKX delisted USDT for EU residents before MiCA came into effect on March 18. Interestingly, OKX itself explained its move by its desire to focus on euro spot trading.
The American exchange Kraken reported back in May that it was considering delisting USDT in Europe. However, as of early December, no concrete steps had been taken in this direction .
Luxembourg-based platform Bitstamp delisted another stablecoin from Tether, EURT, which is pegged to the euro, in the summer of 2024. The reason was the same: MiCA.
Binance said back in June that it would not delist tokens that do not comply with MiCA. However, the platform did announce its intention to restrict access to certain products through these cryptocurrencies for European residents. Among others, launchpool and earn were named.
So it’s not really possible to say that Coinbase has some kind of bias towards USDT or that the rules on different exchanges differ.
And how will all these twists and turns affect Russians, the Tether company and USDT itself?
Impact on Tether and USDT
Yes, Tether and its stablecoin USDT risk losing some market share, as Europe is a large and important player in the global financial system. The size of the loss is a matter of speculation and guesswork, it is impossible to say for sure.
There won’t be a total collapse. USDT is still pegged to the currency of a country with one of the world’s strongest economies. The dollar-denominated stablecoin is still the largest of them all, ranking fourth in terms of market capitalization among cryptocurrencies.
Tether itself is already active in adjusting to MiCA requirements. In its blog, the company announced that it will stop supporting the EURT stablecoin — but instead, it plans to switch its attention to the EURQ and USDQ tokens of the Dutch company Quantoz Payments, which are compliant with MiCA requirements.
It is worth noting that users will have almost a year – until November 27, 2025 – to get rid of their EURT tokens.
Conclusion
In short, the tightening of the EU legislation is causing a response from crypto exchanges that do not want problems with the law. The differences in the reaction of the platforms are explained by different approaches to risks. The changes will affect Russians slightly. Tether, along with its stablecoin, will lose a certain local market share, but is already looking for an opportunity to make friends with European standards.
