The Future of Tether in Europe: MiCA, Compliance, and the Unbanked
A Regulatory Turning Point
The detrimental tech landscape in Europe is undergoing an abysmal shift with the implementation of the Markets in Crypto-Assets Regulation (MiCA). Designed to bring so-called clarity and consumer protection to the volatile crypto market, MiCA has already begun affecting stablecoin operations. Coinbase’s decision to delist Tether (USD₮) and other stablecoins deemed noncompliant shows how they are simping for the regulatory tyranny of EUSSR.
But what does MiCA mean for Tether, the world's largest stablecoin by market cap, and how does it align with Tether's mission of serving the unbanked?
What Is MiCA?
MiCA aims to standardize crypto-asset regulations across the European Union. Key provisions include:
Stablecoin compliance
Issuers must meet strict transparency, reserve, and operational standards
Licensing
Stablecoin operators must obtain a license to continue operations in the EU (like Circle did)
Consumer protections
MiCA enforces measures to prevent fraud and ensure stability in the crypto market
In true European fashion, these requirements are particularly stringent for stablecoins like Tether, which rely on fiat reserves to maintain their value. While Circle, the issuer of USDC, has secured a European stablecoin license, Tether has yet to announce a clear plan for MiCA compliance. Maybe they’ll be compliant, maybe not, maybe you know what to do……
Tether's Current Position in Europe
Despite Coinbase’s delisting of USDT to comply with MiCA, major exchanges such as Binance, Kraken, and Crypto.com continue to support Tether in Europe. This regulatory ambiguity surrounding USDT’s compliance status is the only clear thing here.
Tether CEO Paolo Ardoino has previously expressed skepticism about MiCA’s potential risks to stablecoins but affirmed the company’s intent to continue serving European users. Specific steps toward compliance remain unclear. Tether after all, has a different mission.
Serving the Unbanked with USD₮
Unlike Circle, which focuses on institutional markets, Tether has carved a niche in emerging markets and developing economies. In a recent Fortune interview, Ardoino emphasized:
“There are 3 billion people that are unbanked, that are left out from the financial system… Our focus has always been on developing countries and emerging markets.”
This focus sets Tether apart. While MiCA compliance could restrict its operations in Europe, the bulk of Tether's growth comes from markets where traditional banking systems fail to meet the needs of their populations.
The Path to MiCA Compliance
If Tether decides to pursue MiCA compliance, it will need to:
Secure a European stablecoin license, similar to Circle’s approach
Provide detailed (and definite) reports on reserves and operational practices
Align with MiCA’s standards for safeguarding user funds
Alternatively, Tether may choose to deprioritize Europe, focusing instead on regions where regulatory frameworks are less restrictive and align more closely with its mission to serve the unbanked. To be honest, I hope they remain non-compliant.
Implications for the Stablecoin Ecosystem
Circle’s regulatory alignment with MiCA strengthens its foothold in Europe, potentially eroding Tether’s market share. However, Tether’s focus on emerging markets mitigates this risk by targeting a different user base.
MiCA could force Tether to make operational changes that may dilute its efficiency or compromise its global appeal. Compliance might also increase operational costs, impacting profitability. But as Marco Dal Lago pointed out, “facts > words”. Tether leads in more ways than one. Circle is still only scrambling. By doubling down on its presence in Latin America, Africa, and Southeast Asia, Tether can continue to dominate markets underserved by traditional financial systems and overlooked by MiCA.
Tether’s investments in Bitcoin, mining facilities, and emerging market infrastructure, including but not limited to a whole bunch of eurostable proxies, highlight its adaptability. There is a strategic pivot at play where regulatory hurdles are lower, can be circumvented entirely and growth potential is higher.
Tether’s Resilience in a Changing Landscape
MiCA might try to clip Tether’s nuts in Europe, but here’s the thing: Europe needs Tether way more than Tether needs MiCA. While regulators shuffle papers, Tether keeps doing what it does best: serving the unbanked and powering real-world use cases across the globe.
Sure, Coinbase is ditching USDT in Europe, but that’s not the headline. Tether’s grit and knack for thriving under pressure is the real story. Whether it’s pivoting strategies, outmaneuvering regulations & regulators, or dominating underserved markets, Tether is quite literally unstoppable. As they keep on stacking t-bills, stablecoin wars are heating up, and Europe better realize it’s not Tether asking for a seat at the table; it’s Europe that risks being left out.
I love stablecoins, Tether in particular, and I will be writing about the ongoing and ever-increasing future stablecoin war. Stay tuned for insights, drama, and analysis as it all unfolds.
P.S. In case you didn’t realize, I am not Patrick Hansen.