MiCA compliance squeeze pushes EU exchanges away from Tether toward USDC, EURC
Europe's stablecoin licensing regime is steering exchange liquidity from USDT to MiCA-compliant tokens such as USDC and EURC.
Exchanges operating in the European Union are continuing to curb access to Tether’s USDT, with trading volumes migrating toward stablecoins that hold formal authorisation under the bloc’s Markets in Crypto-Assets Regulation, according to a report by Cointelegraph’s sister UK publication Crypto Daily. The shift reflects the practical bite of MiCA’s stablecoin regime, which requires issuers of tokens referencing a single fiat currency or a basket of assets to obtain authorisation as electronic money institutions or credit institutions within the bloc.
Circle’s USDC and its euro-denominated counterpart EURC have emerged as the principal beneficiaries, the report noted, as EU-based trading venues limit or withdraw non-compliant tokens from their platforms rather than risk falling foul of the regulation.
A licensing regime with teeth
MiCA’s provisions on so-called asset-referenced tokens and e-money tokens took effect in mid-2024, ahead of the regulation’s fuller application across other crypto-asset categories. Under the framework, issuers must maintain reserves, submit to supervisory oversight and, crucially, hold authorisation from a competent authority in an EU member state before their tokens can be freely offered or admitted to trading on platforms serving the bloc.
Tether has not obtained the equivalent EU authorisation for USDT, a gap that has left exchanges operating under European licences exposed to compliance risk if they continue to list the token without restriction. Circle, by contrast, has pursued EU licensing more directly, positioning USDC and EURC as the stablecoins of choice for platforms seeking to stay on the right side of Brussels’ rules.
Liquidity fragmentation as a policy outcome
For traders and institutions operating across jurisdictions, the practical consequence is a fragmentation of stablecoin liquidity along regulatory lines. USDT remains dominant in global derivatives and spot markets outside the EU, while European venues increasingly steer users toward MiCA-compliant alternatives, creating separate liquidity pools that could widen spreads or complicate arbitrage for market participants moving assets between EU and non-EU platforms.
The trend also underscores a broader pattern in which regulatory compliance, rather than market depth or first-mover advantage, is becoming a decisive factor in stablecoin adoption within regulated financial centres. For exchanges licensed under MiCA’s Markets in Crypto-Assets framework, the calculus is increasingly straightforward: continued access to the EU market depends on offering only tokens whose issuers meet the bloc’s authorisation standards.
What it means for UK and European users
For retail and institutional users transacting through EU-licensed platforms, the shift means fewer options for dollar-pegged stablecoin exposure via USDT and a corresponding need to hold or convert into USDC or EURC to maintain liquidity on those venues. UK-based platforms, which sit outside MiCA’s direct jurisdiction, are not bound by the same restrictions, though any cross-border activity involving EU counterparties or infrastructure may still be affected by the divergence.
The episode adds to a growing body of evidence that stablecoin regulation, rather than technology or market share, is now the primary determinant of which tokens circulate freely within Europe’s regulated crypto ecosystem.
