Regulatory Pressure on USDT and Legal Features of USDT0
This legal brief explores the evolving regulatory landscape for Tether (USDT) and the USDT0 protocol, focusing on the anticipated delisting of USDT from European Union platforms and the legal distinctions between USDT and USDT0. In continuation of our previous legal update concerning Tether’s relocation, this piece delves into the most recent developments affecting Tether’s stablecoins.
Key Takeaways:
The European Securities and Markets Authority (ESMA) issued a directive requiring Crypto-Asset Service Providers (CASPs) to cease offering non-MiCA-compliant stablecoins, including USDT.
Because Tether has not sought MiCA authorization, EU-based CASPs may be compelled to delist USDT by January 2025, with a temporary sell-only phase until Q1 2025.
In response to these regulatory challenges, USDT0 was introduced, a multi-chain protocol powered by the LayerZero Omnichain Fungible Token (OFT) standard. USDT0 facilitates seamless cross-chain transfers while maintaining parity with USDT on Ethereum mainnet. It operates under a distinct legal framework emphasizing non-custodial operations and compliance with applicable laws, serving as a complementary solution to address cross-chain functionality without directly issuing or redeeming stablecoins.
On Arbitrum, the USDT contract (proxy) was upgraded to USDT0 at block 300530396 (tx hash).
READ THE FULL REPORT HERE