Revolut, Europe's largest fintech platform, has announced it will stop supporting Tether's USDT by August 31, 2026. The platform plans to disable USDT deposits by the end of July, prompting users to transfer their funds or face automatic conversion to fiat currency.
Regulatory Pressures and Compliance
The decision comes amidst increasing regulatory scrutiny, particularly due to the European Union's new cryptocurrency framework, MiCA. Analyst Max Karpis noted that this move aligns with the ongoing efforts to block non-compliant stablecoins and tokens. Previously, Revolut had introduced features such as zero-fee transfers and 1:1 USDT/USDC swaps. However, this recent step indicates a reversal in support, emphasizing compliance concerns.
Tether's Response to MiCA
Tether CEO Paolo Ardoino has expressed strong disapproval of the MiCA regulation, labeling it as ‘dangerous’ for the future of stablecoins. He commented that the requirement for 60% of stablecoin reserves to remain in uninsured cash deposits could destabilize smaller European banks. Ardoino stressed that larger banks, such as UBS, are generally reluctant to engage with stablecoin businesses, which could pose serious risks in financial operations.
Circle Gains Ground
Amid these changes, Circle's USDC appears to be gaining traction. Circle has received MiCA approval and reported a remarkable $1.21 trillion in transfer volume in June, double that of USDT. This surge reflects a potential shift in user preferences, with many opting for USDC, particularly among those sending money to Europe. Less than a week into July, USDC's transaction volume tripled that of USDT, highlighting a significant transition in stablecoin usage.
Stability Amid Changes
Despite these developments, USDT continues to hold a dominant position in the stablecoin market concerning supply. It remains uncertain whether Circle's USDC or the Euro stablecoin EURC will manage to make substantial gains as Revolut and other European platforms phase out USDT.
