Kraken is forced to withdraw USDT from circulation in Europe due to new MiCA regulations. In response, the company is considering launching its own stablecoin.
Kraken under MiCA pressure
The MiCA regulation is gradually coming into force in the European Economic Area, creating strict rules for stablecoins. The goal of MiCA is to enhance transparency and limit the impact of non-compliant issuers. In this context, Kraken must cease the use of USDT, which is the most traded stablecoin on their platform. According to CoinGecko, USDT/USD and USDT/EUR pairs account for over 30% of trading volumes. Nonetheless, Kraken announced a phased withdrawal: February 13, 2025 — transition to “reduction only” for margin pairs; February 27, 2025 — transition to “sale only” mode for USDT; March 24, 2025 — total cessation of transactions and removal of trading pairs. This measure aims to ensure compliance with MiCA and provide a smooth transition for investors. However, some European traders report USDT is still available on the platform, causing some confusion.
Kraken's response: its own stablecoin
Faced with this regulation, Kraken plans to launch its own US dollar-pegged stablecoin. According to reports, this initiative may be carried out through its Irish subsidiary. This would allow Kraken to maintain control over liquidity and avoid restrictive measures on third-party stablecoins like USDT. This strategy resembles that of Crypto.com, which also plans to release a MiCA-compliant stablecoin in the third quarter of 2025. If realized, this project could place Kraken alongside major players like Binance and Circle, which already have their own stablecoins (BUSD and USDC). The goal is to reduce dependence on Tether, which dominates the market with a $142 billion capitalization.
Impact on investors in Europe
The disappearance of USDT in Europe could change strategies for crypto traders and investors. This digital asset plays a key role in DeFi and serves as a benchmark for many transactions. Its withdrawal could lead to a temporary decrease in liquidity on Kraken, increased volatility of other stablecoins, and migration of users to alternatives like USDC or new stablecoins. Some experts believe this evolution could strengthen the adoption of regulated stablecoins. One thing is clear: the race for stablecoins is just beginning.
The withdrawal of USDT in Europe marks a turning point for the cryptocurrency market. Kraken and other players are betting on regulated stablecoins to adapt. It remains to be seen whether these alternatives will appeal to traders or if Tether will find a way to bounce back.
