Kraken crypto exchange is considering ending support for Tether (USDT) from its EU platform to maintain the Markets in Capital Assets (MiCA) regulations.
Kraken’s Global Head of Regulatory Strategy, Marcus Hughes, recently told Bloomberg that the Kraken exchange is “actively reviewing” its global strategy based on the MiCA regulations by the European Union.
He further indicated that the exchange is preparing for all possibilities, including situations in which the firm may have to end support for certain tokens like USDT on its EU platform.
What’s the Impact of the MiCA Regulation on USDT Holders?
MICA regulations coming into force in July envision a widespread regulation of digital assets in the EU. The regulation is also related to stablecoins such as Tether’s USDT, setting strict rules regarding corporate governance, reserves management, and financial intermediation.
Also read: New EU crypto regulation
Marcus Hughes, Kraken’s head of global regulatory strategy, highlights that the exchange is reviewing its options and is waiting for more precise and well-founded regulation before making a final decision on the status of USDT.
How is Kraken Preparing for Regulatory Compliance?
Kraken’s decision to remove USDT is a sign of the gravity of the issue and how more regulatory actions in the EU will narrow the lattice of stablecoins’ availability. The expectation is that rules will be the case for many stablecoins currently offered and that they will not be long after that under the newly developed rules.
In mass appeal, Kraken announced that the platform is preparing for the very likely possibility that the number of available stablecoins would drastically decrease for European customers.
Also read: EU stablecoin regulation guidelines
One thing Kraken is stressing is the possible set of stablecoins in different diversity that Europe is currently holding and may not be able to continue in the future as stablecoin technology becomes more complex. When that time comes, there will be an endpoint beyond which those assets cannot be registered, which might depend on the assets registered correctly with the EU under money regulation.
How is Tether Dealing With the Regulators?
Earlier in April, Paolo Ardoini, the CEO of Tether, mentioned that they are currently in talks with the regulators. He added that the rules being proposed “pose severe risks to stablecoins regulated in the EU.”
The European Banking Authority is close to finalizing MiCA’s technical standards and entering the full implementation stage. They will be available by the beginning of 2025. By adopting these requirements, Kraken aims to have an even better image as an exchange.
As Kraken’s focus point was vital in technical terms, Tether pinpoints Euro liquidity for its European customers and USDT as an essential transaction gateway. Paolo Ardoini, the head of Tether, has expressed his opinion regarding some sharing the MiCA standards, but despite this, the company underlined its readiness to communicate with regulatory authorities.
