Kraken Contemplates Dropping Tether in Europe Amid Regulatory Changes; US Legislation Pushed Forward

Kraken, a prominent cryptocurrency exchange, is contemplating removing support for the stablecoin Tether (USDT) in the European Union due to impending regulations under the Markets in Crypto-Assets Regulation (MiCA). The regulation, set to be enforced in two phases with rules regarding stablecoins coming into effect on June 30, 2024, imposes strict limits on transactions and reserve requirements. Tether's CEO, Paolo Ardoino, expressed concerns about the regulation, particularly the requirement for 60% of stablecoin reserves to be in cash deposits across multiple banks, a challenge given the limited acceptance of such businesses by European banks. Kraken's consideration follows a similar move by crypto exchange OKX, which ceased support for USDT trading pairs in the European Economic Area to comply with forthcoming rules. Meanwhile, in the United States, cryptocurrency companies and advocacy groups are urging lawmakers to pass the Financial Innovation and Technology for the 21st Century (FIT21) Act, which aims to clarify the regulatory framework for digital assets, particularly regarding the roles of the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC). House Financial Services Committee Chair Patrick McHenry indicated that the FIT21 bill could be ready for a full floor vote later in the month, with bipartisan support anticipated.