This is a move that could have significant consequences for the global cryptocurrency market, the US cryptocurrency exchange Kraken It is “actively reviewing” plans, including removing support for the Tether USDT stablecoin in the European Union (EU).

The potential delisting comes as the EU prepares to implement a novel regulatory framework for cryptocurrency markets (MiCA), which is due to come into force in July. According to Bloomberg reportUpcoming EU regulations are expected to impact USDT, the world’s most traded cryptocurrency.

Kraken is considering delisting Tether from the USDT exchange in Europe

MiCA, which the European Banking Authority (EBA) is still finalizing, will restrict sales of stablecoins to EU investors.

Traders commonly utilize stablecoins like USDT to transfer digital assets between exchanges or to store wealth away from token price volatility. Marcus Hughes, global head of regulatory strategy at Kraken, said:

We fully plan for all eventualities, including situations where specific tokens such as USDT simply cannot be issued. We are actively reviewing this and once the position becomes clearer, we will be in a position to take firm decisions on this matter.

Tether, issuer USDTechoed Kraken’s comments, stating that the company expects exchanges to “rightly focus on EUR liquidity for European clients while maintaining USDT as a quick solution.”

However, Tether’s CEO, Paolo Ardoinohas previously expressed concerns about certain aspects of the MiCA requirements and the company does not plan to be regulated under the novel regulations in the medium term.

The potential withdrawal of USDT from Kraken’s European platform follows a similar move by another major cryptocurrency exchange, OKX, which earlier this year prevented EU users from buying or selling other cryptocurrencies using USDT. Hughes further stated:

It’s an evolving picture. We are clear that the range of types and numbers of stablecoins currently offered in Europe will likely not be possible in the future. At some point in the future there will be a gap where this will not be possible.

Kraken evaluates options for European headquarters

For further context: upcoming MiCA regulations will require issuers of asset tokens and e-money tokens such as USDT to be licensed by a national financial authority in at least one EU member state by June 30.

Issuers will also be required to meet “higher standards” on corporate governance, conflicts of interest and reserve management, such as maintaining at least one-third of all funds with an independent lending institution.

According to the report, Kraken is coping with changes regulatory landscapethe exchange is also in the “advanced stages” of selecting its European headquarters once MiCA comes into force, with France and Ireland emerging as popular destinations among its rivals such as Coinbase, Binance and Gemini.

However, if Kraken takes further steps to remove the USDT Tether stablecoin from its European platform, it could have significant consequences for the exchange’s users and customers in the EU.

Kraken’s European customers will no longer be able to directly trade or transact using USDT, potentially leading to reduced liquidity, wider spreads between bid and ask prices, price volatilityand lower trading volume.

This may cause inconvenience and disruption for customers accustomed to using the Tether stablecoin, as they may need to explore alternative stablecoins such as Circle’s USDC or fiat on-ramp, which complicates their cryptocurrency transactions.

Featured image from Shutterstock, chart from TradingView.com