Circle proposes MiCA equivalence fix for Tether's $184B stablecoin

A regulatory concept called equivalence could let Tether re-enter Europe without creating a separate EU-licensed stablecoin — but the politics are stacked against it.

Circle's top EU policy executive proposed a regulatory amendment that would let the European Union accept foreign stablecoin rules under MiCA, opening a path for Tether's $184 billion USDT to return to the region after exiting in July.

"Equivalence is emerging as a compelling alternative to the multi-issuance model, currently the only possible regulatory pathway for these global stablecoins under MiCA," Patrick Hansen, Circle's head of EU policy, said.

The EU's Markets in Crypto-Assets Regulation reached full effect on July 1, 2026, when transitional arrangements expired. By Hansen's estimate, about 99 percent of stablecoins are issued outside the EU, meaning the rules cover a fraction of the global market. MiCA requires large stablecoin issuers to hold at least 60 percent of reserves in bank deposits — a structure Tether avoided by letting exchanges delist USDT rather than comply. Tether is now based in El Salvador and has not cleared the new US stablecoin law.

Equivalence is not new to EU law — the bloc accepted UK clearing houses under the same framework in January 2025. Applying it to stablecoins would require amending MiCA, with the best opportunity coming in the review the EU opened in May 2026. The European Central Bank is testing a digital euro, and most large stablecoins are dollar-denominated, creating political headwinds for any fix that favors foreign issuers.

The proposal highlights a structural gap in MiCA's design. The regulation gives the EU no mechanism to accept a foreign issuer's home-country rules, forcing any firm serving European users to establish a licensed EU entity. Circle took that path, winning a French license in 2024, and USDC remained available on European platforms throughout the transition.

Tether took the opposite route. Rather than restructure its reserve holdings to meet MiCA's banking requirements, the company allowed USDT to be dropped by EU exchanges. A July 2026 study found that MiCA-related delistings reduced USDT trading on exchanges with greater European exposure and increased USDC's relative share on those venues.

Even if equivalence were adopted, Tether's return would not be automatic. The company is incorporated in El Salvador, a jurisdiction without a comprehensive stablecoin framework. It has also built a separate US dollar-pegged token for the US market rather than adapting USDT itself. A quick re-entry into Europe under any equivalence regime looks unlikely, Hansen's framing acknowledged.

The politics of equivalence cut both ways. The EU has used the framework in insurance and banking to recognize foreign regulatory standards as equivalent to its own. But stablecoins present a different calculation: most are tied to the dollar, and the European Central Bank's digital euro project gives the bloc a competing interest in limiting foreign stablecoin dominance. The MiCA review, now open, will determine whether the EU treats stablecoin equivalence as a practical fix or a political bridge too far.

This article is for informational purposes only and does not constitute investment advice.