Tether Walks Away from EU MiCA Over One Rule

[fullfitlarry]

https://x.com/coinbureau/status/2102490623572095458

Ok, so this is the reason why Tether didn't comply with MiCA as they think they are in a disadvantage as EU requires that 60% of their reserved to be put on commercial banks.

Although right now there are a call from ECB and all 27 EU Central Banks to scrap this rule.

So let's see how it goes, Tether CEO said that they might reconsider their decision if MiCA rule is going soft on them in the future.

And I think MiCA will have to give in to the pressure of ECB and those CB in their region.

[asriloni]

That's also the reason why USDT was getting delisted from EU. However, i've heard that 60% of reserve must be related to the total amounts used to operate in EU, not whole of their stable coins, but this still needs some verifications.

Other than it, it clearly explain how tether is not as cleaning as USDC by circle who could comply to the MICA regulation. Don't you think it's weird circle can easily comply with Mica while tether can't?

Theorically, missing 450m potential market is weird for tether unless they have a transparency concern that may cause them a trouble in the future. So they're looking for special permission to operate there with the guarantee they won't get risked by being not transparent enough.

This is why i prefer USDC instead of USDT.

[TastyChillySauce00]

So that was the really the reason Tether backed out from the EU MiCA compliance, the $100,000 capped insurance indeed doesn't make sense for a company with massive global reserve.

But, wouldn't it be easier for Tether to simply follow what Circle is doing? create EU entity and get EMI license, issues USDC from that entity, create EU specific USDC reserve pool and do routine rebalance? like a dual issuer structure, one for global and one specifically for EU. I suppose Tether really want a far simpler regulation to issue stablecoin in the EU. Tether actually already has presence in EU even after MiCA delisting through StablR which they invested in 2024.

[PostQuantumBTC]

I did not known that this was what that happened. If this is true, MiCA license is looking like a joke to me. Why must 60% of the fiat the stable coin is backed with must be in commercial banks? If it is in bonds, it is also good. What that is very crucial is that the money must not be misappropriated or misused.

[nelson4lov]

That's also the reason why USDT was getting delisted from EU. However, i've heard that 60% of reserve must be related to the total amounts used to operate in EU, not whole of their stable coins, but this still needs some verifications.

Other than it, it clearly explain how tether is not as cleaning as USDC by circle who could comply to the MICA regulation. Don't you think it's weird circle can easily comply with Mica while tether can't?

Theorically, missing 450m potential market is weird for tether unless they have a transparency concern that may cause them a trouble in the future. So they're looking for special permission to operate there with the guarantee they won't get risked by being not transparent enough.

This is why i prefer USDC instead of USDT.

First of all, I want to confirm your point about the fact that not all $180B+ of USDT that Tether has issued would be needed for the reserve. Now, that's out of the way, I don't think Circle compliance should be used as benchmark for Tether. If anything, what happened to Circle in 2023 already showed that the rule itself is flawed.  USDC depegged to $0.87 because $3.3B of its reserves was stuck in SVB. That's the same kind of bank exposure the 60% rule would force on issuers, with deposit insurance covering only €100k per bank


Tether disagreeing with that rule might not mean they are trying to hide stuff. They have gotten a thorough audit recently so if they had anything to hide, they wouldn't have done that audit. Moreover, most central banks like ECB and EU central banks don't like that rule too because it causes a "contagion risk".

[Accardo]

MICA is a strict rule that looks like it won't bend anytime soon, the longer Ardoino waits, hoping that it'll get safer, the more tether will continue to miss out on their European clients or users, getting their eyes off MICA entirely is much safer than this false hope of expecting MICA to change their policy, Tether should focus more on countries not controlled by MICA rules, though bad business, but better.

[asriloni]

First of all, I want to confirm your point about the fact that not all $180B+ of USDT that Tether has issued would be needed for the reserve. Now, that's out of the way, I don't think Circle compliance should be used as benchmark for Tether. If anything, what happened to Circle in 2023 already showed that the rule itself is flawed.  USDC depegged to $0.87 because $3.3B of its reserves was stuck in SVB. That's the same kind of bank exposure the 60% rule would force on issuers, with deposit insurance covering only €100k per bank

Firstly, thanks for confirming it. So it's based on the numbers how much money in the EU instead of using full FDV. That aside, i think Circle compliance should be used as a benchmark because they operated in the same business like what tether did. SVB case is not even relevant because it's not even linking up to the MICA license the granted by French entity to them.

Tether disagreeing with that rule might not mean they are trying to hide stuff. They have gotten a thorough audit recently so if they had anything to hide, they wouldn't have done that audit. Moreover, most central banks like ECB and EU central banks don't like that rule too because it causes a "contagion risk".

If they didn't try to hide the shady stuff, they would open to apply for the MICA license. We have several stable coin issuer such as Circle, Paxos, and etc already got their Mica license. Why can't tether who claimed themselves to be the biggest stable issuer do that while we know how big EU market for them?

The most important thing, tether never let others to know the report about their reserve even after they said their reserve fully audited and verified by KPMG.

[nelson4lov]

~Snipped

Firstly, thanks for confirming it. So it's based on the numbers how much money in the EU instead of using full FDV. That aside, i think Circle compliance should be used as a benchmark because they operated in the same business like what tether did. SVB case is not even relevant because it's not even linking up to the MICA license the granted by French entity to them.

[...]

If they didn't try to hide the shady stuff, they would open to apply for the MICA license. We have several stable coin issuer such as Circle, Paxos, and etc already got their Mica license. Why can't tether who claimed themselves to be the biggest stable issuer do that while we know how big EU market for them?

The most important thing, tether never let others to know the report about their reserve even after they said their reserve fully audited and verified by KPMG.

Going to just reply to both of the points you raised at once. I'm not a Tether spokesperson, just an average user. Tether has always been criticised for not doing an audit, and they finally did it. I agree that they should publish the full KPMG report though.

As for the MiCA license, not all of the rules will fit every stablecoin provider. Circle has deep roots in the US and already IPO'd there, which is why CRCL is listed on the New York Stock Exchange. My point is that Circle's strong suit is regulatory compliance.

Imo, the issue isn't that Tether has something to hide, but that the 60% deposit requirement doesn't fit their business model. Tether holds the majority of its reserves in T-bills, and to comply they'd have to shrink that to around 40% base. To make matters worse, those bank deposits are only insured up to €100k per bank, on billions of dollars (remember what happened with SVB? ). That's terrible risk-to-reward.

Like I said yesterday, the ECB and EU central banks now want to replace the 60% rule with a liquidity test. If that happens and Tether still stays out, then I'd agree with you.

[coinrifft]

MICA is a strict rule that looks like it won't bend anytime soon, the longer Ardoino waits, hoping that it'll get safer, the more tether will continue to miss out on their European clients or users, getting their eyes off MICA entirely is much safer than this false hope of expecting MICA to change their policy, Tether should focus more on countries not controlled by MICA rules, though bad business, but better.

I don't think that they are into it, I mean it's a very tough regulations, so for sure they already accounted for the missed clients in EU. And they could have accounted for everything, so it's not that they're drooling, or counting spoiled milk.

There business is on the line here, and they don't want to sacrifice as there are no certainty about the huge amount that they need to deposit in EU banks. And as much as they can do it as well freezing accounts, the bank can also do that to them.

[hugeblack]

First of all, I want to confirm your point about the fact that not all $180B+ of USDT that Tether has issued would be needed for the reserve. Now, that's out of the way, I don't think Circle compliance should be used as benchmark for Tether. If anything, what happened to Circle in 2023 already showed that the rule itself is flawed.  USDC depegged to $0.87 because $3.3B of its reserves was stuck in SVB. That's the same kind of bank exposure the 60% rule would force on issuers, with deposit insurance covering only €100k per bank

While your argument is logical, Tether does not have a spotless track record (nor do they attempt to hide information) so their non-compliance regarding financial requirements reinforces this view. Confirming the peg implies the availability of liquidity; however, if reserves are held in assets that cannot be quickly liquidated, a scenario similar to Circle’s in 2023 could lead to a total price collapse.