EU Regulator Sets Deadline for Crypto Firms to Cease Tether's USDT Transactions

The European Securities and Markets Authority (ESMA) has mandated that crypto service providers licensed under the Markets in Crypto-Assets (MiCA) framework must stop dealing in non-compliant stablecoins, specifically targeting Tether's USDT. The deadline for this directive is set for January 8, 2027, as outlined in an opinion issued by ESMA on October 8, 2026.

Under the new guidelines, MiCA-authorized crypto-asset service providers (CASPs) are required to halt new trading in non-compliant stablecoins immediately and prevent clients from increasing their holdings. However, firms can still offer limited services during the wind-down period, including sell-only orders, conversions into other assets, and withdrawals.

Tether's USDT was not authorized as an e-money token under MiCA, primarily due to its failure to meet reserve requirements, which stipulate that at least 60% of reserves must be held in European bank deposits. This decision has led major platforms like Coinbase and Binance to restrict USDT transactions for users in the European Economic Area, with Revolut completing its phase-out by August 31, 2026. In contrast, other stablecoins such as Circle's USDC and EURC have complied with MiCA standards and remain available on licensed EU platforms.

As the January deadline approaches, traders in the EU holding USDT will need to consider their options, including selling, converting, or withdrawing their tokens. While Tether will lose access to regulated markets in the EU, private ownership of USDT remains unaffected, allowing users to retain their tokens in self-custody wallets. This situation highlights the ongoing tension between regulatory compliance and reserve management for stablecoin issuers.

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Source: KLEA News