USDT's Legality Unclear under MiCA Due to Lack of Prohibitions
In an interview with Cointelegraph, Juan Ignacio Ibañez, a member of the MiCA Crypto Alliance's technical committee, shared his insights on the changing landscape of stablecoins in the European Union (EU).
As of mid-2025, most European regulated exchanges have either delisted or heavily restricted Tether (USDT), the largest stablecoin by market capitalisation. However, this process has been gradual rather than simultaneous across all platforms.
MiCA (Markets in Crypto-Assets) effectively forces the removal of non-compliant stablecoins like USDT unless issuers adapt swiftly to EU rules. Major exchanges such as Binance have already completed USDT removal, reflecting an ongoing phase-out rather than a single coordinated event.
The implementation of MiCA by exchanges depends on their compliance deadlines and readiness. The regulation is self-executing across EU member states since December 2024, but the timeline for each exchange varies. There is no official outright ban on USDT, but strict MiCA rules around licensing, reserve requirements, and consumer protections create practical barriers for continued listings without issuer adaptation.
Some issuers of stablecoins are considering issuing EU-specific tokens compliant with MiCA, implying a phased transition rather than abrupt market disruptions. Users in the EU are advised to switch to MiCA-compliant stablecoins like USDC or euro-denominated digital currencies as USDT availability continues to decline within regulated venues.
The future of USDT on exchanges in the EU is uncertain and depends on the actions of individual companies and potential regulatory statements. Tether's CEO, Paolo Ardoino, has expressed concerns about the potential risk that MiCA could pose to the banking system, specifically pointing to the requirement for stablecoins to hold at least 60% of reserves in potentially "vulnerable" EU banks.
Coinbase's delisting of USDT is a proactive measure, according to Ibañez. Other exchanges aren't necessarily required to act as quickly as Coinbase, and as of December 27, many exchanges, including Binance, continue offering USDT services to EU clients without announcing plans to cease these operations.
The key milestone is MiCA's effective date: December 30. A transition period of 18 months will follow MiCA's enforcement, during which EU countries may allow existing businesses to continue operating under current legislation until January 1, 2026. European regulators have not officially mandated the delisting of USDT.
The EU is working towards establishing a comprehensive regulatory framework for stablecoins by the end of the transition period, aiming to align with standardized client protection measures. Kraken and Tether have collaborated to launch MiCA-compliant stablecoins, but the future of USDT within the EU remains uncertain.
- In light of MiCA regulations, the industry is witnessing a transition from non-compliant stablecoins like Tether (USDT) to those that adhere to EU rules, such as Circle's USDC or euro-denominated digital currencies in the finance sector.
- The ongoing regulation of stablecoins by the EU, particularly MiCA, is prompting tech companies like Tether and Kraken to consider issuing EU-specific tokens to ensure continued operations, while also addressing the concerns about the potential risk to the banking system.
