The Kraken cryptocurrency exchange is contemplating discontinuing its support for Tether (USDT) on its EU platform in order to comply with the Markets in Capital Assets (MiCA) regulations. Marcus Hughes, Kraken’s Global Head of Regulatory Strategy, stated in an interview with Bloomberg that the exchange is currently reviewing its global strategy in light of the MiCA regulations imposed by the European Union. He also indicated that Kraken is preparing for various scenarios, including the possibility of ending support for certain tokens like USDT on its EU platform.
The MiCA regulations, set to take effect in July, aim to regulate digital assets more extensively within the EU. These regulations also pertain to stablecoins such as Tether’s USDT, imposing strict rules on corporate governance, reserves management, and financial intermediation. Hughes emphasized that Kraken is carefully considering its options and awaiting more specific and well-founded regulations before making a final decision regarding the status of USDT.
Kraken’s decision to potentially remove USDT reflects the seriousness of the situation and the increasing regulatory measures within the EU that will limit the availability of stablecoins. It is expected that these regulations will apply to many stablecoins currently offered, resulting in their gradual disappearance under the newly developed rules. Kraken has made it known that it is preparing for the highly likely scenario of a significant reduction in available stablecoins for its European customers.
One point of concern for Kraken is the diverse range of stablecoins currently held in Europe, which may no longer be viable in the future as stablecoin technology becomes more complex. At that point, there will be a limit to the registration of these assets, which will likely depend on their compliance with EU money regulations.
Tether, on the other hand, is engaged in discussions with regulators and has expressed concerns about the risks posed by the proposed rules to stablecoins regulated in the EU. The European Banking Authority is nearing the finalization of MiCA’s technical standards and the subsequent full implementation stage, which will be completed by early 2025. By adhering to these requirements, Kraken aims to enhance its reputation as an exchange.
While Kraken focuses on technical aspects, Tether emphasizes Euro liquidity for its European customers and USDT as a crucial transaction gateway. Paolo Ardoini, the head of Tether, has expressed his views on sharing the MiCA standards, but the company has also emphasized its willingness to engage with regulatory authorities.
