Kraken ‘Actively Reviewing’ The Status of Tether in Compliance With MiCA

Crypto exchange Kraken is 'actively reviewing' the status of Tether (USDT) in European Union regions, according to Bloomberg. 

This move follows the approval of the Market in Capital Assets (MiCA) regulation by the European Union. 

Marcus Hughes, Kraken's Global Head of Regulatory Strategy, indicated that Kraken is “planning for all eventualities.” 

“It’s something that we’re actively reviewing, and as the position becomes clearer, we can take firm decisions on that,” Marcus Hughes said.

Hughes stressed the importance of being proactive and adaptable in response to the evolving regulatory landscape.

MiCA's Impact on Stablecoins

MiCA introduces a comprehensive regulatory framework for digital assets in the EU, set to launch in July 2024 and take effect in 2025. This regulation imposes restrictions on stablecoins, requiring them to be supervised by the European Banking Authority (EBA). 

Together with the European Securities and Markets Authority (ESMA), the EBA is developing additional rules for stablecoins through Regulatory Technical Standards (RTSs).

Tether's Concerns

Last April, Tether's CEO, Paolo Ardoino, expressed concerns over the proposed rules, stating they pose significant risks to stablecoins regulated in the EU. 

Ardoino emphasized the need for stablecoins to maintain 100% reserves in treasury bills, rather than uninsured cash deposits, to avoid exposure to bank failures. He cited recent events in the US, such as the collapse of Silicon Valley Bank, as examples of the risks associated with uninsured cash deposits.

Other crypto exchanges, such as OKX, have already phased out USDT from their European platforms in anticipation of MiCA's implementation.