USDT Delisting: Reasons, Consequences, and Recommendations for Investors

USDT (Tether) delisting from European exchanges has already begun, and in the US, regulators are increasingly considering tightening control over this stablecoin, which creates uncertainty for private investors and businesses. The international law firm Antwort Law works with a large number of crypto entrepreneurs and projects, so we always monitor the latest changes in this area and are ready to help understand the current situation. In this article, we will take a detailed look at the reasons for possible delisting, the current state of USDT, potential scenarios for the development of the situation, and also provide key recommendations for investors and businesses.

What is delisting?

Delisting is the process of excluding a cryptocurrency or other asset from the listing (list of traded instruments) on an exchange. This can happen either on the initiative of the platform itself or as a result of regulatory pressure.

There are two types of delisting:

• Voluntary - when the issuer of the asset decides to remove its coin from trading on a particular exchange.
• Forced – when an exchange removes an asset due to non-compliance with regulations, low liquidity, suspicion of fraud, or other risks.

Reason for possible USDT delisting #1: regulatory changes in the European Union known as the Markets in Crypto-Assets Regulation (MiCA). This regulation sets strict standards for stablecoin issuers, including:

• Licensing: issuers must have special licenses, such as a credit institution or electronic money institution license.
• Reserve requirements: an obligation to keep at least 60% of reserves in European banks.
• Transparency: providing detailed information about reserves and operations.

USDT, being one of the most popular stablecoins, does not fully comply with these requirements. In particular, Tether has not obtained the necessary licenses in the EU and does not comply with the requirements for placing reserves in European financial institutions, which leads to some exchanges operating in Europe being forced to delist USDT in order to comply with new regulations.

Reason for possible delisting #2: regulatory initiatives in the US to regulate stablecoins. In particular, a bill known as the Stablecoin Transparency Act was introduced, which provides for:

• Division of stablecoin issuers into categories: depending on the size of their current assets, issuers with an issue volume of over $10 billion will be equated to banking institutions and subject to supervision by the US Federal Reserve. Smaller issuers will be regulated at the state or federal level.
• Mandatory licensing: all stablecoin issuers must obtain appropriate licenses.
• Reserve requirements: Issuers are required to hold reserves of liquid assets such as US Treasuries or cash to ensure the stability of their digital assets.

Tether, the issuer of USDT, may have difficulty meeting these requirements, potentially leading to USDT being delisted from US exchanges.

So far, USDT delistings have primarily affected the European market:

• Coinbase: In December 2024, Coinbase Europe, Coinbase Germany, and Coinbase Custody International delisted USDT and a number of other stablecoins for European customers.
• OKX: In March 2024, OKX delisted USDT for users in the European Economic Area, focusing on trading pairs with the euro.

It is worth noting, however, that not all exchanges have followed suit: major platforms such as Binance, Crypto.com and Kraken continue to support USDT trading for European users, indicating that the approach to regulation and compliance with the new regulations may vary between exchanges.

Possible scenarios for the future of USDT:

1. Increased regulation and compliance: Tether may change its reserve structure, obtain the necessary licenses in the EU and the US, which will allow USDT to remain on exchanges.
2. Mass delisting and user migration to alternatives: If regulators tighten controls, exchanges may abandon USDT, and users will switch to other stablecoins that comply with the new regulations, such as USDC or DAI.
3. Market split: USDT may remain on Asian exchanges, but disappear from US and European platforms. 

Using USDT in the context of tightening regulation may lead to the following legal risks:

• Account freezes and financial restrictions: In jurisdictions where USDT does not comply with regulatory requirements, using this stablecoin may result in freezing of funds or other sanctions.
• Fines and sanctions: Companies that continue to use USDT in violation of local laws may face financial fines and other penalties.
• Uncertainty of legal status: in the context of changing regulations, the legal status of USDT may be uncertain, which creates additional risks for users.

In the context of changing legislation, it is important to receive timely advice from specialists. Antwort Law recommends:

1. Monitor official announcements from the exchanges you use regarding support for USDT and other stablecoins.
2. Consider the possibility of using stablecoins that comply with new regulations, such as USDC, which has received the necessary licenses in the EU and the US.

We also offer you:

• Legal analysis and advice on compliance with new regulatory requirements
• Development of a strategy for the transition to more regulated assets
• Support for business registration and licensing in the US, EU and other jurisdictions
• Interaction with supervisory authorities, minimization of the risks of fines and account blocking
• Legal support for cryptocurrency transactions, contract development and protection of business interests

Antwort Law is ready to help you adapt to changing regulatory requirements, minimize risks and build a legal strategy for working with cryptocurrencies. Don't wait until your capital is at risk - contact us today for personal advice and to protect your interests.

Lidia Ivanova

International lawyer
Antwort Law