Is USDT in trouble? European regulators call for accelerated restrictions on stablecoins that do not

The European Securities and Markets Authority (ESMA) is pushing for companies to restrict stablecoins that do not comply with the EU's new regulatory law, the Crypto Asset Market Regulation Act (MiCA).

Ensure compliance before Q1 2025

According to Cointelegraph, as one of the EU financial market regulatory agencies, ESMA Responsible for overseeing the compliance of MiCA and issued a statement on January 17th regarding Asset Reference Tokens (ARTs) (i.e. stablecoins). ESMA calls on Crypto Asset Service Providers (CASPs) to take urgent measures to address stablecoins that do not comply with MiCA standards. However, ESMA did not specify which issuers or stablecoins would be subject to restrictions.

ESMA emphasized in its statement that financial regulatory agencies of each country, namely National Supervisory Authorities (NCAs), should assist CASPs in adjusting their operations to comply with the latest guidelines of the European Commission. The guideline clearly states that MiCA prohibits unauthorized issuers from providing stablecoins.

Individuals or institutions outside of the issuer may provide ART or EMT (Electronic Currency Tokens) to the public, subject to specific conditions

This guideline states. One of the conditions is that the issuer must obtain EU authorization, and the other condition is that the provider must obtain written consent from the issuer. ESMA Require regulatory agencies in various countries to ensure that CASPs comply with this regulation as soon as possible, no later than the end of the first quarter of 2025.

The buffer period for Q1 2025 needs to be changed to 'Sell Only'

Although ESMA has given CASPs until Q1 2025 to ensure compliance, the regulatory agency also urges operators to accelerate the implementation of restrictive measures.

The restrictions on existing services are expected to be completed by the end of January 2025. In order to enable EU investors to liquidate or convert their positions in ART and EMT that do not comply with MiCA standards, relevant CASPs can still maintain the 'Sell Only' mode of these products during Q1 2025

USDT issuer Tether is not authorized

According to the latest statement from ESMA, the world's largest stablecoin USDT (Tether) will be restricted in the EU market. Juan Ignacio Iba ñ ez, a member of the Technical Committee of the MiCA Encryption Alliance, stated in an interview.

According to ESMA's definition, USDT is considered a non compliant asset, and Tether has not been authorized by MiCA, which is beyond dispute

In a LinkedIn post on January 18th, Juan Ignacio Iba ñ ez further stated that CASPs must announce the removal of USDT before January 31st and restrict users to only sell and not buy. By March 31st, USDT should no longer appear in the market, even in the 'Sell Only' mode.

In response to this, a Tether spokesperson responded in an interview with Cointelegraph:

We understand that the MiCA regulatory environment is changing, which may have an impact on the stablecoin market. Many exchanges are actively working with local regulatory agencies (NCAs) to address potential issues and reduce the impact on users. At present, we do not expect any immediate impact on Tether users as these discussions are still ongoing