European Union regulations set to take full effect by year-end are prompting the removal of Tether’s dominant stablecoin, USDT, from several crypto exchanges operating in the bloc.
Market participants warn the move risks dampening liquidity and investor interest just as the United States signals a more lenient stance toward digital assets under President-elect Donald Trump.
The EU’s Markets in Crypto-Assets (MiCA) legislation, aimed at increasing transparency and curbing illicit activities, requires stablecoins offered on centralized exchanges to be issued by entities holding e-money licenses. Tether Holdings Ltd., the world’s largest stablecoin provider, has yet to obtain such a license. With the Dec. 30 compliance deadline looming, regulated exchanges face no choice but to delist USDT.
The EU Crackdown
While the EU’s crackdown was intended to improve oversight and reduce crimes such as money laundering, some industry insiders argue it could undercut the region’s competitive edge. Investors and traders accustomed to the liquidity and stability provided by USDT may look elsewhere, or default to fiat currency pairs at a time when crypto-friendly signals from Washington have propelled prices skyward.
“I understand the rationale to an extent, but this approach is quite restrictive for European clients, given that USDT is by far the most liquid stablecoin,” said Usman Ahmad, chief executive officer of Zodia Markets Holdings Ltd., a crypto trading firm backed by Standard Chartered Plc. “It could limit the EU’s appeal to global traders.”
Stablecoins typically pegged to traditional currencies like the U.S. dollar or euro, are fundamental tools in digital markets, allowing traders to enter and exit crypto positions swiftly or move funds across borders at lower cost. They are also increasingly used by firms for settlement and payments and by investors experimenting with tokenized versions of traditional assets.
Mounting Scrutiny
However, stablecoins have faced mounting scrutiny over their potential misuse in illicit activities. Earlier this month, UK authorities reported shutting down Russian networks suspected of channeling billions of dollars for oligarchs and spies, partly using USDT. Tether has stated it unequivocally condemns the criminal use of its tokens and remains committed to fighting illicit activity.
Circle Internet Financial Ltd., Tether’s main competitor, secured an e-money license in July and can continue operating its USD Coin (USDC) in the EU. But for many traders, the delisting of USDT means fewer liquid trading pairs, potentially driving up costs. Pascal St-Jean, CEO of crypto asset manager 3iQ Corp., said that forcing investors to shift away from USDT pairs may cause disruptions and higher transaction expenses.
At OKX, which removed USDT trading pairs within the EU in April, clients have gravitated back to fiat pairs. “I was quite surprised by that,” said Europe CEO Erald Ghoos, noting that traders appeared willing to adapt, albeit with reduced efficiency.
Meanwhile, the geopolitical backdrop is shifting. After years of U.S. regulatory clampdowns by the Securities and Exchange Commission, President-elect Trump’s pro-crypto posture and key appointments suggest a more permissive environment. His victory last month sparked a crypto rally that pushed Bitcoin above $100,000 for the first time, with investors betting on fewer regulatory hurdles in the U.S.
Tether Invests In Rumble
The contrast is stark: Venture investment in European crypto startups is on track to hit a four-year low in 2024, while North America shows signs of revival. Though a European Central Bank survey indicates crypto ownership within the euro area has more than doubled since 2022, officials cautioned that the true figure remains modest.
Meanwhile, Tether, the leading company in the digital asset industry, has announced a strategic investment of $775 million in Rumble, a prominent video-sharing platform and cloud services provider.
This investment comprises a $250 million cash infusion to support Rumble’s growth initiatives and a tender offer for up to 70 million shares at $7.50 per share. Following the transaction, Rumble’s Chairman and CEO, Chris Pavlovski, will maintain his controlling stake in the company.
Paolo Ardoino, CEO of Tether, emphasized that this investment reflects shared values of decentralization, independence, transparency, and free expression. He noted that the collaboration aligns with Tether’s commitment to empowering technologies that promote freedom and challenge centralized systems.
Source: Tether
Chris Pavlovski expressed enthusiasm about the partnership, highlighting the strong connection between cryptocurrency and free speech communities, both rooted in a passion for freedom and decentralization. He also mentioned that the $250 million cash addition to Rumble’s balance sheet would fuel growth initiatives as the company moves toward EBITDA breakeven in 2025.
The transaction is expected to close in the first quarter of 2025, subject to customary closing conditions, including regulatory approvals.
The EU insists MiCA will foster innovation and a safer market environment. The framework aims to streamline cross-border operations, enhance competition, and ensure stablecoin issuers keep sufficient reserves. Yet critics fear that by trying to push out the world’s most liquid stablecoin, the EU could inadvertently undermine its own ambitions—just as the United States prepares to embrace an era of looser oversight and rapid growth in the digital asset sector.
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