Crypto exchange OKX will no longer accept trading pairs with USDT for users based in the European Economic Area. Only EUR and USDC pairs would be available for spot trading as of March 18. However, USDT-related deposit withdrawals and over-the-counter transactions remain accessible for OKX’s users in the region, per a spokesperson.
In a screenshot shared by a user, OKX cited regulatory concerns as the reason behind the modifications. Alongside the delisting, the exchange plans to launch 30 new EU-compliant trading pairs.
Recently, the leading crypto exchange announced its 16th Proof of Reserves [PoR] report. As reported by TronWeekly, the value of the assets held by the users has changed considerably since the previous report on January 25. BTC assets have decreased by 11,707 units to 135,900, while ETH declined a bit from 87,789 to 1.42 million. Notably, USDT reserves grew by 427 million units to 5.716 billion.
The abrupt move came as a surprise, as stablecoins like USDT form a major chunk of crypto trading. Stablecoins are the preferred choice due to their minimal volatility, as their value is pegged to traditional fiat currencies like the dollar. But it’s no surprise given how regulators have stepped up scrutiny of stablecoins due to concerns about the broader risks.
Despite their inherent nature of maintaining price stability, crypto advocates have cited counterparty issuer risk. Unlike Bitcoin or Ethereum, stablecoins like USDT rely on a centralized single entity [Tether Limited] to manage issuance and redemption. Here, the stability and redeemability of the stablecoin might face an uncertain future if its issuing entity encounters financial difficulties, regulatory issues, or legal challenges.
OKX’s Move: Implications
Additionally, stablecoins are not legally insulated from bankruptcy if any financial troubles arise for the issuing entity. This lack of legal protection could exacerbate risks in the event of insolvency or regulatory action against the issuer.
Investors and users of stablecoins should be aware of these risks and consider them when deciding whether to hold or transact with stablecoins. Diversification and due diligence are essential strategies to mitigate counterparty issuer risk when dealing with stablecoins or any other financial instrument.