Kraken Actively Reviewing Tether Amid New EU Crypto Rules

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As a researcher with a background in financial regulation and cryptocurrencies, I find Kraken’s statement regarding its potential removal of support for Tether (USDT) on its European Union exchange due to the upcoming MiCA regulations intriguing. The EU’s MiCA guidelines are designed to impose stricter rules on stablecoins, which will impact Tether Holdings Ltd.’s USDT, a stablecoin that maintains a one-to-one value with the dollar and is widely used by traders for transferring digital assets between exchanges or storing wealth.

Kraken is carefully considering the possibility of discontinuing support for the popular cryptocurrency Tether (USDT) on its EU exchange as a response to impending digital asset regulations becoming effective in July.

As an analyst, I would rephrase it as follows: The anticipated EU regulations, referred to as MiCA, are projected to influence my analysis of Tether Holdings Ltd.’s USDT, a stablecoin intended to mirror the U.S. dollar‘s value. Although the finalized details of these European Banking Authority guidelines remain elusive, they are expected to impose restrictions on access to stablecoins for investors within the EU.

Marcus Hughes, Kraken’s head of regulatory strategy, expressed in an interview on Thursday that they are preparing for various scenarios, including ones where listing certain tokens like USDT may no longer be feasible. This is a situation they are currently assessing, and once the situation clarifies, they will make definitive decisions regarding this matter.

Traders predominantly utilize stablecoins for transferring digital assets among exchanges or for safeguarding their wealth by avoiding the fluctuations in unstable token values.

In response to Kraken’s comments, Tether stated that exchanges should prioritize providing sufficient Euro liquidity for their European customers, while maintaining USDT as a convenient onramp and offramp option.

As a crypto investor, I’ve noticed that Tether recently referenced a statement from its CEO, Paolo Ardoino, expressing concerns about certain aspects of the MiCA (Markets in Crypto-Assets) regulatory framework and confirming ongoing discussions with regulators. Previously, in April, Ardoino shared with crypto publication The Big Whale that Tether doesn’t intend to comply with MiCA regulations in the near future.

European regulatory bodies are in the process of finalizing instructions for MiCA (Markets in Crypto-Assets), which is anticipated to be fully enacted by the beginning of 2025. The European Banking Authority (EBA) will play a pivotal role in overseeing the rules governing stablecoins within the EU. By June 30, issuers of asset-linked and e-money tokens will be required to obtain a license from their respective national financial authorities.

To comply with stricter regulations, issuers are required to adhere to more stringent guidelines in the areas of corporate governance, conflict of interest, and reserve management. One such requirement is maintaining at least one-third of their funds in a reputable, independent credit institution.

Kraken is deeply engaged in the process of deciding on its post-MiCA European headquarters, with frontrunners being France and Ireland. Notable competitors such as Coinbase, Binance, and Gemini are also vying for this position. Kraken’s regulatory registration can be found on its website in Italy, Spain, Ireland, Belgium, and the Netherlands.

He added, “At some point in the future, there’ll be a cut off at which that won’t be possible. A lot of that will depend on which assets are being properly registered within the European Union under the e-money regime.”

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2024-05-17 23:02