Tether has expanded its presence in Europe by investing in StablR, a European stablecoin issuer. StablR recently obtained an electronic money institution (EMI) license in Malta, which is important for compliance with upcoming EU regulations.
Tether's investment in StablR aligns with its strategy to maintain a presence in the European market as the EU prepares to implement its Markets in Crypto-Assets (MiCA) regulation. The financial details of the investment have not been disclosed, but Tether now holds a significant equity position in StablR.
This investment follows Tether's decision to discontinue its own euro-pegged stablecoin and focus on supporting compliant issuers in the region. Tether's investment is expected to leverage its newly launched tokenization platform, Hadron, which offers tools for compliance, know-your-customer (KYC) and anti-money-laundering (AML) checks, as well as risk management and secondary market monitoring.
The European stablecoin market is at a pivotal moment with evolving regulatory frameworks. Tether's CEO, Paolo Ardoino, is optimistic about the regulatory landscape but has concerns about the systemic risks these regulations could introduce. Tether has been critical of the MiCA regulations, which require major stablecoin issuers to hold a significant portion of their backing assets in bank deposits. Currently, Tether holds over 83% of its USDT reserves in U.S. government bonds, repo agreements, and money market funds.
Stablecoins are a rapidly expanding segment of the digital asset market, valued at approximately $200 billion. They provide liquidity for crypto trading and facilitate everyday payments and remittances. Despite the dominance of U.S. dollar-pegged stablecoins, euro-pegged stablecoins have struggled to gain traction.
Tether's investment in StablR is part of its strategy to solidify its position in the European market and navigate regulatory changes. Tether aims to support the growth of stablecoins in Europe through strategic partnerships and investments.