The crypto giant behind USDT, the world’s largest stablecoin, has decided to wind down its own euro-pegged stablecoin and instead support smaller issuers that align with the European Union’s MiCA regulations.
- Tether has made a strategic investment in StablR, a Malta-licensed stablecoin issuer, marking its second investment in a European issuer within a month.
- The EU’s upcoming Markets in Crypto-Assets (MiCA) regulations, set to take effect by year’s end, will reshape the region’s stablecoin market.
- Tether has chosen to shutter its euro-pegged stablecoin and concentrate on partnering with compliant firms through its tokenization platform, Hadron.
Tether, the company behind the $140 billion USDT cryptocurrency, announced on Tuesday its investment in European stablecoin issuer StablR. StablR currently issues euro- and dollar-denominated stablecoins—EURR and USDR—and holds an Electronic Money Institution (EMI) license in Malta, a key requirement for meeting the EU’s MiCA compliance standards.
As part of the collaboration, Tether will provide operational support to StablR through its recently launched Hadron tokenization platform, which offers tools for compliance, know-your-customer (KYC) and anti-money laundering (AML) processes, risk management, and secondary market monitoring.
While the size and valuation of the investment were not disclosed, a Tether spokesperson confirmed that the company has secured a “significant equity position” in StablR.
This investment highlights Tether’s strategy to maintain a presence in the European stablecoin market by supporting smaller issuers while leveraging its Hadron platform to provide essential services. The move comes as MiCA regulations introduce stricter requirements for stablecoin issuers across the EU. Last month, Tether announced plans to discontinue its euro-pegged stablecoin while simultaneously backing Netherlands-based stablecoin issuer Quantoz, which is also MiCA-compliant.
“The European stablecoin market is at a turning point, with regulation finally catching up to innovation,” Tether CEO Paolo Ardoino. Ardoino added that while the evolving regulatory landscape is a positive development, Tether remains concerned about the systemic risks MiCA introduces, particularly within Europe’s already fragile banking sector.
Tether has been critical of MiCA’s requirement that major stablecoin issuers hold a substantial portion of their reserves in bank deposits. This regulation contrasts with Tether’s current reserve strategy, where over 83% of USDT reserves are held in U.S. government bonds, repurchase agreements, and money market funds.
Stablecoins, cryptocurrencies pegged to fiat currencies, represent a rapidly growing sector of digital assets, valued at approximately $200 billion. While U.S. dollar stablecoins dominate with a near 99% market share, euro-denominated stablecoins remain underdeveloped, with a market value of just $400 million. Nevertheless, stablecoins are increasingly used for crypto trading, payments, and cross-border remittances due to their cost-efficiency and speed compared to traditional banking systems.
Tether’s move underscores its commitment to navigating the changing European regulatory environment by investing in compliant, innovative solutions for the future of stablecoins.
