Coinbase wants to remove non-MiCA-compliant stablecoins from the exchange

Following the introduction of the Markets in Crypto-Assets Regulation (MiCA) in the European Union, crypto exchanges are facing the challenge of adapting their offerings to the new regulatory requirements. The MiCA guidelines, which have been in force since June 2024, include strict requirements for so-called stablecoins, i.e. cryptocurrencies that represent a stable equivalent value to the US dollar, for example. A key aspect of MiCA concerns the hedging of stablecoins, which must guarantee a 1:1 peg to traditional fiat currencies, as well as compliance with liquidity regulations and transparency requirements. In this context, Tether (USDT), the largest stablecoin by market capitalization, is moving into the spotlight. As reported by Bloomberg, among others, Coinbase, one of the world's largest crypto exchanges, is now planning to remove non-MiCA-compliant stablecoins such as Tether's USDT from the exchange.

According to the reports, Coinbase plans to remove all stablecoins from its European platform that do not comply with MiCA requirements by December 2024. This includes, in particular, those that cannot demonstrate the necessary disclosure obligations and liquidity reserves mentioned above. Bloomberg is therefore speculating that Tether (USDT) in particular could be affected, as it has often been criticized in the past for its lack of transparency. However, the company's exact plan as to which stablecoins will be affected is not yet known.

Given our commitment to compliance, we intend to restrict the provision of services to EEA users in connection with stablecoins that do not meet MiCA requirements until December 30, 2024
_{Coinbase in a statement to Bloomberg}

USDT has established itself as the leading stablecoin in recent years and is used on almost all major trading platforms. In particular, it enables traders to quickly switch between volatile crypto assets and a relatively stable digital asset without having to resort to traditional fiat currencies. The great importance of Tether also lies in its role as an essential liquidity pool for the entire crypto economy. Traders, institutions and exchanges use USDT not only to protect against price fluctuations, but also as a bridge between different cryptocurrencies and fiat currencies. Due to its widespread use on almost all major trading platforms and its role in the DeFi landscape, Tether is indispensable for many market participants.

If a market-wide delisting of Tether (USDT) were to occur on all exchanges in the European Union, the impact on the market would probably be significant. As mentioned, Tether is by far the most widely used stablecoin worldwide. A ban or restriction of USDT would lead to a short-term reduction in trading volumes and liquidity, particularly for arbitrage and cross-border transactions. Many European traders and institutions would be forced to switch to MiCA-compliant stablecoins such as Circles USD Coin (USDC) or the Euro Coin (EUROC), which have already demonstrably adapted to the new regulatory requirements. These could therefore play a more important role in the future. In addition, trading platforms based in the EU could lose international competitiveness.

However, the key question remains whether Tether will be able to meet the strict MiCA requirements in the medium term and thus secure a listing on European trading platforms. Tether has taken important steps in recent years to improve its transparency and secure its reserves, as evidenced by its record results for the fourth quarter of 2023. Nevertheless, concerns remain regarding full compliance with regulatory requirements, particularly in relation to disclosure obligations and the ongoing review of reserves. It remains to be seen whether Tether is ready to adapt to European regulatory standards or whether the top dog will actually be displaced by regulation-compliant stablecoins in the long term.