Digital currency trading platform Coinbase might soon make a dramatic push in major EU compliance. According to growing musings on X, it is likely to make changes to stablecoin support in the European Economic Area (EEA).
Speculation Surrounding Coinbase USDT Delisting
As shared on X., there is speculation that Coinbase is planning a potential Tether (USDT) delisting. Although the exchange has not confirmed the speculation, community members believe this move is inevitable.
As per the update, the trading platform merely stated its intentions to restrict services for stablecoins. Entities in the European Economic Area that do not meet MiCA requirements by December 30, 2024, will be affected.
“In November, we will share details regarding the transition plan to assist our EAA customers. This will include options for switching to stablecoins that have achieved compliance under MiCA, such as USDC and EURC,” the exchange allegedly stated.
The statement hinted Coinbase’s desire to ensure product compliance under MiCA regulations.
In anticipation of such a scenario, commentators believe that investors need to save up now ahead of market dips. Essentially, some see the delisting of USDT as an opportunity to buy tokens whose price falls if the update is real.
MiCA’s Impact on Stablecoins and Tether
MiCA is a regulatory framework established by the European Union to oversee the crypto-asset space. It covers different aspects, including market integrity, investor protection, and stablecoin regulation.
The goal is to prevent market manipulation, insider trading, and fair trading. In the stablecoin space, MiCA specifies rules for issuers that will guarantee adequate reserves and safeguard user funds.
Although MiCA was officially adopted in May 2023, its implementation is still ongoing. The stablecoin-related provisions came into effect on June 30, 2024, and the remaining parts will come into effect in December 2024. Coinbase has issued its update in anticipation of the full implementation.
Tether, the world’s largest stablecoin issuer, has faced regulatory pressures in the past. A critical area of concern to regulators relates to Tether’s reserve practices and transparency.
The MiCA regulation seeks to compel Tether to be more detailed in disclosures and open to audits to protect users’ funds. If it fails to comply, this has the potential to affect not just its operations in the EEA but also its market dominance.
Circle’s MiCA Compliance and Market Implications
At its current rating, USDT has a market capitalization of over $119 billion, which positions it as a leader in the sector.
Although Tether dwarfs competitors like USDC, whose market capitalization is about $35 billion, a USDT delisting in the EEA will impact its position. The U.S.-Based stablecoin issuer Circle has complied with MiCA since June 30. Therefore, its two stablecoins—USDC and EURC—are licensed to operate in the EU.
There are expectations that Tether may not adhere to the MiCA regulation before the December deadline. In that case, relatively smaller stablecoins PYUSD may fill the vacuum in the EU. In the meantime, Coinbase users are expectation of any potential announcement in this regard.
