The exchange made this decision in the run-up to the full enactment of the Markets in Crypto-Assets (MiCA) regulatory framework on cryptocurrencies in the European Union. And although the law will not be fully implemented until December 30, won’t there be a chain reaction where other platforms will delist USDT trading pairs? How big a risk is this for Tether? Will the company lose its monopoly?
A complete cancellation of USDT trading on major exchanges in the European Union could indeed trigger a chain reaction as other platforms follow OKX's lead to comply with the new MiCA requirements. This is a significant risk for Tether and its stablecoin USDT.
Restricting the use of USDT in the European Union certainly undermines Tether's monopoly status as the leader in the stablecoin market. If USDT trading is banned on all major European exchanges, this could lead to an outflow of liquidity and the rise in popularity of alternative stablecoins such as Circle's USDC or new government digital currencies.
However, Tether is not expected to completely lose its monopoly on a global scale. Outside the EU, demand for USDT remains high, especially in Asia. But MiCA regulation in Europe certainly poses a major challenge to Tether's dominance in the stablecoin market.