Kraken Will Not Delist USDT In Europe Despite MiCA Regulations

After several rumours last week of Kraken potentially delisting the USDT stablecoin, the cryptocurrency exchange has now reassured users that it does not intend to remove USDT in Europe and will continue adhering to all legal obligations. The rumours began when the Markets in Crypto Assets (MiCA) bill, which will be implemented later this year, introduced new rules focusing on stablecoins, which are designed to maintain a stable value against traditional currencies.

Kraken Global Head of Asset Growth and Management, Mark Greenberg, addressed recent speculation regarding the potential delisting of USDT in the European market in a social media announcement. He stated that European users highly value access to USDT and the company is exploring all options to provide USDT under the forthcoming regulatory framework.

The Lawsuit Against Kraken

In November 2023, the United States Securities and Exchange Commission (SEC) filed a lawsuit against Kraken, alleging that it had been operating an unregistered securities trading platform. This action followed a settlement of charges related to previous staking services provided by Kraken months earlier.

In February 2024, Kraken sought to dismiss the lawsuit, arguing that the case was based solely on a registration issue, asserting that cryptocurrencies complying with SEC regulations should be classified as commodities rather than securities. Recently, Kraken intensified its defense, urging the court to dismiss the SEC and its claims to avoid a major restructuring of the U.S. financial regulatory system, according to court documents filed in the Northern District of California on Thursday.

The SEC opposed Kraken and their motion to dismiss, asserting its enforcement action falls within its authorized mandate and highlighting its role in enforcing registration requirements for securities intermediaries. Kraken has pushed for the dismissal of these claims by the SEC in order to prevent a significant restructuring of the U.S. financial regulatory system.

Stablecoin Comparison

There has been ongoing debate about the safety of stablecoins, specifically USDT and USD Coin (USDC). As of April, the market capitalization of USDT stood at $104 billion, more than three times that of USDC which is at $32 billion. This disparity is partly due to the network effect, with USDT having launched in 2014, four years before USDC. Still, the dominance of USDT is also reflected in its daily trading volume, which is 7.5 times higher than that of USDC.

Stablecoins come in several different types, each employing unique mechanisms to maintain their value. Fiat-collateralized stablecoins are backed by reserves of fiat currency, such as the US dollar, held in a bank account, with USDT and USDC being prominent examples. Crypto-collateralized stablecoins, like DAI, use other cryptocurrencies as collateral, leveraging mechanisms like over-collateralization and smart contracts to ensure stability. Algorithmic stablecoins maintain their value through algorithms and smart contracts that adjust the supply based on market demand, without relying on collateral, TerraUSD (UST) was a notable example before its collapse. Additionally, commodity-backed stablecoins, such as PAX Gold (PAXG), are supported by reserves of commodities like gold or oil. Each type of stablecoin aims to provide price stability but uses different strategies to achieve this goal.