Strategic positioning for investors and builders

For serious crypto builders and institutional investors, MiCA isn’t a burden—it’s a signal that crypto is maturing. The clarity it brings enables long-term planning, cross-border fundraising, and innovation at scale. Compliance becomes a moat, not a roadblock.

Implications for stablecoins and DeFi

Stablecoins like USDT and USDC will need to meet liquidity reserve mandates, provide 1:1 backing proof, and cap transaction volumes unless classified as e-money. Algorithmic stablecoins, such as Terra’s failed UST, are effectively outlawed under MiCA due to their inherent instability and lack of transparency.

As of April 2, 2025, Tether’s USDT is facing significant changes in the European Union due to the Markets in Crypto-Assets (MiCA) regulation, which fully took effect on December 30, 2024. MiCA is the EU’s comprehensive framework aimed at regulating cryptocurrencies, with a particular focus on stablecoins like USDT. Here’s what’s happening:

MiCA imposes strict requirements on stablecoin issuers, classifying them as either "asset-referenced tokens" (ARTs) or "electronic money tokens" (EMTs). For EMTs like USDT, which is pegged to the US dollar, issuers must obtain an electronic money institution (EMI) license, maintain full 1:1 reserve backing with liquid assets, and comply with transparency and auditing standards overseen by the European Banking Authority (EBA). Tether, the company behind USDT, has not yet secured this license or fully met these transparency requirements, raising questions about its compliance.

As a result, several major exchanges in the EU have taken action. Coinbase delisted USDT in December 2024, citing MiCA compliance concerns, while Binance announced on March 3, 2025, that it would halt spot trading of USDT and eight other non-compliant stablecoins for European Economic Area (EEA) users as of March 31, 2025. However, Binance will still allow custody, deposits, and withdrawals of USDT, aligning with a clarification from the European Securities and Markets Authority (ESMA) on March 4, 2025. ESMA stated that while trading non-compliant stablecoins like USDT on regulated exchanges is restricted, custody and transfers are not prohibited under MiCA.

The market impact has been notable. Between December 19 and December 30, 2024, USDT’s global market capitalization dropped from $141 billion to $138 billion, reflecting uncertainty and shifts in usage. In the EU, traders and exchanges are pivoting to MiCA-compliant alternatives like Circle’s USDC, which secured compliance in July 2024, and Euro-backed stablecoins such as EUROC. This shift is partly driven by MiCA’s caps on non-euro stablecoin transactions (1 million daily transactions or 200 million euros in notional value), aimed at reducing systemic risks and favoring euro-denominated assets.

Despite these restrictions, USDT remains accessible in the EU through decentralized exchanges (DEXs) and non-custodial wallets, offering workarounds for users. Tether has voiced concerns about MiCA’s stringent rules, with CEO Paolo Ardoino arguing they could limit innovation and introduce risks to stablecoin operations. The company is exploring solutions, including partnerships with MiCA-compliant firms like Quantoz for a potential new stablecoin, and shifting focus to markets outside the EU, such as Asia (60-70% of USDT volume) and El Salvador, where it recently obtained a Digital Asset Service Provider license.

In summary, USDT isn’t outright banned in the EU under MiCA, but its use on regulated platforms is heavily restricted due to non-compliance. This has sparked a transition to compliant stablecoins, reshaped liquidity, and prompted Tether to adapt its strategy, while the broader crypto market watches how this regulatory shift will play out.

What to do now

Crypto firms should begin their MiCA readiness assessments today. Legal structuring, compliance hiring, tech audits, and capital planning are all necessary steps. Investors should review exposure to non-compliant platforms or tokens and shift focus to regulated alternatives.

The MiCA landscape favors players that anticipate change and adapt early. Whether you’re an exchange operator, DeFi developer, or passive holder of stablecoins, aligning with MiCA ensures access to one of the largest and most influential crypto markets on the planet.