Author
Ahmed Barakat
Author
Share it
BitGo CEO Mike Belshe warns that the European Union’s MiCA system could lead to a “big stablecoin crisis” if major crypto USD-backed issuers fail to meet the bloc’s requirements before the July 1, 2026 deadline.
The warning comes at a time when exchanges operating in the EU are already testing for signs of surviving the cuts.
Belshe’s concern focuses on what happens to decentralized stablecoins, especially Tether’s USDT, facing exclusion from EU platforms at the same time.
The result, he argues, cannot be a systemic change in the market. It could be a financial problem.
Note: The best crypto to change your profile
Europe MiCA’s Crypto Stablecoin Regulations: What the Regulation Really Needs
The Markets in Crypto-Assets regulations it went into effect on June 29, 2023, and its stablecoin provisions, Titles III and IV, from June 30, 2024. The full enforcement, including the strict enforcement of non-eligible tokens, goes through July 2026.
Any stablecoin that denominates a single legal currency, such as the United States dollar, is called an e-money token under MiCA, and that category brings with it the responsibility of banks.
EMT issuers must be licensed as EU credit institutions or e-money institutions, have assets in decentralized, highly liquid instruments, and guarantee redemption at any time.
For Tether, which has long operated outside of EU regulation, this is nothing more than a disclosure. It is an architectural reconstruction.
Tether CEO Paolo Ardoino has previously said that the need to freeze a large portion of reserves in EU-regulated banks creates its own systemic risk, exactly the type of banking structure that MiCA claims to prevent.
The law also empowers the EBA to set indicators on tokens that are considered “important,” while the limit has previously floated around €200 million per day in the EU.
For USDT, which controls 90%+ of the stablecoin trade in the world, this cap will be shaken quickly, and the financial perspective of the EU activities will fall with it.
The stablecoin rules being played in Europe are very different from what the US is willing to accept. Discussions about US stablecoin policy it has been moving towards a lighter style.
Who Loses, Who Gains, and What the Problem Looks Like
Belshe’s main argument is not that MiCA’s intentions are wrong. That is, the transition period creates an edge.
If USDT loses the listings of EU exchanges before there are other options to follow, traders will find themselves in pairs without a comparable dollar-liquidity pool to absorb volume. The slope increases. Price adjustments open up between the EU and international markets. Arbitrage is systematically complicated.
Circle, the USDC issuer, has positioned itself as a major beneficiary of the change. Circle is licensed by the EU e-money institution and has developed its own euro-denominated USDC and EURC to meet MiCA’s deposit and retention requirements.
The beginning of that pursuit is real. But Belshe’s caveat, and I have to take it seriously, is that USDC and EURC do not carry the market depth to replace USDT on a regular basis without causing exactly the chaos that MiCA was designed to prevent.
The EU crypto market is not small. The forced migration of billions in stablecoin volume to smaller pools is not a smooth transition. That is the meaning of a financial problemscompressed into a valid deadline.
Find out: The Best Trading Signals
The Stakes: What Happens If Tether Doesn’t Comply By July 2026
If Tether fails to obtain approval to comply with MiCA before the July 2026 deadline, the EU-regulated exchange will face a binary choice: withdraw USDT or risk management penalty.
Several major platforms, including Coinbase’s EU operation, have already moved to block USDT access to European users before the deadline. That is not a future risk. It’s already happening.
If the exchange removes USDT from all parts of the EU at the same time, the economic shock will be in a narrow window. Investors holding USDT positions in EU accounts may need to migrate to official assets, USDC, EURC, or fiat, due to time constraints and shallow ledgers.
The mechanism Belshe is warning against is this: not a slow return, but a forced withdrawal event driven by the regulatory calendar, not market fundamentals.
The important change is not whether MiCA enforcement occurs. It will. The change is that Tether is moving towards compliance, and if the regulators will give any relief to the major stablecoins that exist during the change, none of them are confirmed at this time.
