Tether Axes Stablecoin Offerings Amid Shifting EU Regulations

• Stablecoin issuer Tether is cutting its offerings in Europe.
• Tether will phase out one of its stablecoins.
• Regulations within the EU are tightening.

Tether , the leading stablecoin issuer in the crypto industry, has experienced a year of remarkable growth , but not without its fair share of regulatory hurdles. Tether has frequently been thrust into the spotlight over non-compliance concerns, casting a shadow over its market position and dominance.

The stablecoin giant is cutting back its offerings in the latest blow to its operations.

Tether Pulls the Plug on EURt

The latest chapter in USDT issuer Tether’s regulatory woes is forcing it out of a key market. On Wednesday, November 27, 2024, the stablecoin issuer announced its decision to discontinue support for EURt, its Euro-pegged stablecoin.

Citing the move as a response to shifting regulatory standards in Europe, Tether stated that it would cease minting EURt and stop accepting issuance requests for the stablecoin. Additionally, support for the stablecoin will be fully discontinued across all blockchains, and holders will have until November 27, 2025, to redeem their holdings.

Commenting on the decision, Tether CEO Paolo Ardonio stressed that the lack of a supportive regulatory framework for stablecoins within Europe drove the move.

This builds on his month-long criticism of the regulatory landscape in the region, particularly in the company’s failure to meet the rules under the Markets in Crypto-Assets (MiCA) regulation.

Tether Struggles to Meet Europe’s Demands

The recently implemented MiCA stablecoin rules require issuers to meet strict criteria , including maintaining sufficient reserves, proper fund segregation, regular reporting, and secure custody arrangements.

One key provision mandates that major stablecoin issuers like Tether hold at least 60% of their reserves in cash with a commercial bank to ensure investor protection.

However, Tether’s Ardoino opposed, arguing that large cash reserves offer more risks than benefits. The CEO stressed that such a move exposes the firm to banking failures since deposits are uninsured, contending that holding 100% of reserves in treasury bills is a safer option.

While Ardonio emphasized at the time that discussions were ongoing with regulators, the firm’s recent axing of the EURt suggests that it failed to persuade regulators.

Looking forward, the CEO has emphasized that Tether will focus on other initiatives , pending the establishment of more favorable regulatory standards within the EU.

On the Flipside

• Unlike Tether, the second largest stablecoin issuer, Circle, is thriving in Europe.
• In June 2024, crypto exchange Bitstamp delisted EURt . 
• Tether is facing broader regulatory concerns. In October 2024, reports surfaced of an ongoing investigation by US authorities into the firm’s operations.

Why This Matters

Regulations in the crypto industry are ever-evolving as global financial authorities ramp up efforts to ensure oversight. Tether’s move to drop its EURt stablecoin marks its exit from a key market and underscores the consequences of non-compliance.

Find out more about growing concerns over Tether’s operations in this article:
Tether Faces Allegations of Being a “Bigger Scam Than FTX”  

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