Kraken is ready to delist USDT and other stablecoins not compliant with MiCA

18 hours ago 10

The cryptocurrency exchange Kraken is now ready to put an end to all those non-MiCA compliant stablecoins, such as Tether (USDT).

From March 31, the platform will officially remove all currencies considered non-compliant with European regulations, with clients in the EEA space able to use alternative stablecoins. What to do if holding USDT on Kraken?

Let’s see everything in detail below.

Kraken prepares for the delisting of Tether (USDT), Tether EURt (EURT), PayPal USD (PYUSD), and TrueUSD (TUSD)

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In view of the full implementation of the European regulation “Markets In Crypto Assets” (MiCA), the cryptocurrency exchange Kraken has decided to delist Tether (USDT) and non-compliant stablecoins. Kraken had already anticipated the need to comply with European regulations, warning its users of the possible removal of non-compliant currencies from its services.

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In particular, in addition to Tether (USDT) which holds a dominant position in the stablecoin sector, PayPal USD (PYUSD), TerraUSD Classic (UST), Tether EURt (EURT), and TrueUSD (TUSD) will also be removed. All crypto activities of users in the European Economic Area (EEA) that fall into these categories will be permanently closed over the coming weeks, following a specific timeline.

We remind you that Kraken offers Virtual Asset Service Provider (VASP) services in Germany, Spain, Italy, Netherlands, Belgium, Ireland, France, and Poland. Despite the application of the MiCA regulation potentially raising eyebrows among ‘trustless’ supporters, it is important to emphasize that Kraken, as a registered and authorized operator in these countries, is practically obliged to comply with the new European regulations. This is necessary to continue offering its legal and regulated services in the European Union.

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In any case, it is also appropriate to clarify that the MiCA aims to create a safer and more regulated environment for users and investors in the cryptocurrency market. Although some changes may seem restrictive, the introduction of such regulations aims to protect investors, ensure greater transparency and prevent possible systemic risks related to cryptocurrencies and stablecoins.

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The timeline of the delisting: stop of all activities by March 31

Kraken has stated that it will officially cease support for all stablecoin not compliant with MiCA on March 31, 2025. If you hold USDT or other non-compliant coins on Kraken, you can withdraw them in the preceding days by sending them via blockchain transfer to other exchanges or wallets that support them. Alternatively, you can choose to do nothing, and wait for these assets to be automatically converted into alternative stablecoin, compliant with the new regulation.

From February 27, 2025, EEA customers will no longer be able to freely trade USDT and the other aforementioned coins through spot trading. Specifically, from that day, the “sell only” option will remain open, and it will no longer be possible to generate new deposit addresses.

On March 17, 2025, it will then be the turn of margin trading, with the outstanding margin positions that will be automatically closed.

On March 24, Kraken will permanently suspend spot trading for USDT and the other assets in question (including the “sell only” option). Open orders will be closed, and it will no longer be possible to trade these assets with other cryptocurrencies or fiat currencies. These assets can therefore only be withdrawn or used as collateral for any leveraged position.

Finally, as mentioned initially, from March 31 all remaining non-compliant assets held by EEA clients will be converted into an equivalent currency. This also includes collateral balances in leveraged positions and opt-in reward balances. Although it is not yet known which stablecoin will be specifically used for automatic conversions, it is assumed that this will be USDC.

The negative impact of MiCa regulation on the stablecoin market in Europe

Kraken’s decision to comply with the changes imposed by MiCA is a necessary move to continue operating legally and regularly in the European Union. However, this decision also involves some disadvantages, particularly regarding the exclusion of stablecoins like Tether (USDT), which is the undisputed leader in the crypto sector.

This exclusion could have a negative effect on the liquidity of the cryptocurrency market in Europe, as USDT is widely used as a base for trading operations. European users might find themselves forced to use alternative stablecoins that may not have the same liquidity or stability.

More specifically, the MiCA aims to enhance the role of Euro-based stablecoins, encouraging exchanges like Kraken to offer similar products to its customers. Despite the respectable goal, we must necessarily remember that the Euro stablecoin market is not at all comparable to the dollar-denominated counterpart. Consider that according to data from The Block, USD-pegged stables represent about 99.3% of the entire market share of this niche for the Ethereum blockchain.

Thanks to the exclusion of USDT and other coins considered non-compliant, Europe risks losing its role as a financial hub for the cryptocurrency sector. Meanwhile, other jurisdictions are pushing for more flexible regulations, capable of attracting new users and brilliant minds. Chapeau to Christine Lagarde and Ursula von der Leyen for having created a regulation on stablecoins that, even with the best intentions, seems more oriented towards limiting European innovation than protecting it.