EU Stablecoin Regulation Creates Rift Between USDT and USDC

The European Union's Markets in Crypto-Assets Regulation (MiCA) has created a rift between two stablecoins, USDT and USDC, in the European market. According to the regulation, a fiat-pegged stablecoin must be issued by an authorized credit or electronic money institution, and Tether did not obtain this authorization for USDT.

Circle obtained the necessary authorisation and issues USDC in the bloc on a compliant basis, while Tether did not. This created asymmetry between the two stablecoins, making USDC more usable at regulated exchanges in Europe than USDT.

The practical effect is that if you're in the European Economic Area (EEA) and want to move funds from a regulated exchange to a casino, USDC has fewer points of failure. USDT may still be usable at the casino end but can be difficult to acquire or offload at regulated exchanges.

The separation between USDT and USDC affects not only their use cases but also their treatment by regulatory bodies. The European Union treats stablecoins as electronic money tokens, subjecting them to stricter data collection requirements.