With the implementation of the MiCA framework last year, major changes are afoot in the stablecoins and cryptocurrency market. After securing its MiCA license just two weeks ago, Crypto.com will soon become the second major exchange after Coinbase to delist Tether’s USDT from their platform in the EU.
Tether is yet to obtain their MiCA license owing to their lack of transparency regarding their reserves, something that they have faced criticism for in the past.
31 January 2025 is the deadline for the exchange to delist USDT from its platform.
The impending delisting of Tether stems from the USDT’s inability to meet MiCA’s strict compliance requirements. The exchange will also suspend purchases of 9 other tokens.
Another one, this time @cryptocom delisting $USDT, $WBTC and others in Europe@justinsuntron @paoloardoino pls fix pic.twitter.com/cSJGm6Ax2h
— Wazz (@WazzCrypto) January 28, 2025
The other 9 tokens apart from the USDT are Wrapped Bitcoin (WBTC), Dai (DAI), Pax Dollar (PAX), Pax Gold (PAXG), PayPal USD (PYUSD), Crypto.com Staked ETH (CDCETH), Crypto.com Staked SOL (CDCSOL), Liquid CRO (LCRO) and XSGD (XSGD).
A Crypto.Com representative said, “Users holding these tokens will have until the end of Q1, 31st of March, to convert them to MiCA-compliant assets, otherwise they will be automatically converted to a compliant stablecoin or asset of corresponding market value.”
Investors, however, can still withdraw the affected token until the first quarter of 2025. Full delisting of these tokens is to come in effect on 31 March 2025.
MiCA has put in place strict standards for stablecoins to protect investors, maintain financial stability and transparency. One of the key requirements is for stablecoins to show their reserves. Stablecoin issuers must keep their reserves at acceptable levels and should regularly undergo audits to demonstrate that their assets remain stable.
Explore: MiCA-Compliant Stablecoins Dominate European Market. BTC-EUR Trading Pair Flourishes!
USDT Delisting Impact and Challenges
If stablecoin issuers want to operate in the EU, they now have only two choices. They can either comply with MiCA or risk losing out on the European market. Tether so far has resisted compliance. The company considers converting its holding in US bonds to cash in European markets a risky proposition.
The company however has its reasons. Tether faced operational paralysis in 2018 when its funds were frozen because of legal issues involving one of their banking partners. The USDT faced a similar issue in 2023 when their collateral was frozen after the collapse of a US bank.
The delisting of USDT from European exchanges might lead to complications. As a widely used stablecoin in the crypto market, its delisting could lead to reduced liquidity. Reduced USDT liquidity might result in lower trading volumes and price volatility for other cryptocurrencies.
Investors might face some difficulties for a while in hedging against market volatility. As investors turn to alternative stablecoins, there is a risk of market fragmentation and inefficiencies in cross border transactions.
Many exchanges are however, combating this issue by establishing an EU base to comply with MiCA requirements. Gemini for instance, recently established its headquarters in Malta as a hub for its MiCA framework.
Explore: ESMA Sets January Deadline To Align With MiCA Stablecoin Rules, Tether’s USDT Can Be Affected
The post Tether’s USDT To Be Delisted On Crypto.Com, Nine Other Tokens At Risk appeared first on 99Bitcoins.
