Tether General Counsel Resigns Amid USDT's EU Regulatory Uncertainty

Stuart Hoegner, the longtime general counsel of Tether and Bitfinex, has resigned from the company amid ongoing uncertainty around USDT's compliance with European Union crypto regulations.

Hoegner Retires, Hilliard Takes Over

Stuart Hoegner retired as general counsel for Tether and its sister company Bitfinex on Thursday, where he has served since 2014. Hoegner owns about 13% of Tether, which is expected to generate $6.2 billion in profits by 2023. Michael Hilliard, Tether's current general counsel, will succeed him as head of legal for both companies, overseeing legal operations amid growing regulatory scrutiny.

Tether Faces EU Regulatory Compliance Challenges

The change in legal leadership at Tether coincides with the implementation of the Markets in Crypto Assets (MiCA) Regulation in EU countries, which came into effect on December 30. This new regulatory framework imposes stricter rules on stablecoin issuers, requiring them to obtain an EU-based Electronic Money Institution (EMI) license, adhere to strict capital and regulatory standards, and maintain liquidity reserves for immediate redemption. Additionally, stablecoin issuers must hold 60% of their reserves in low-risk banks.

With the new rules, uncertainty has emerged for stablecoin issuers like Tether, as it remains unclear whether their USDT stablecoin, which is pegged to the US dollar, is fully compliant with EU crypto regulations. Since mid-December, several exchanges, including Coinbase Europe, have stopped offering USDT to their European Union customers.

Tether’s Market Cap Falls

Since MiCA came into effect, USDT’s market cap has fallen by $1.6 billion, now sitting at just over $137 billion. This marks the most significant drop since November 2022, when USDT’s market cap fell 5.7% following the collapse of the FTX exchange. Over the past two weeks, USDT’s market cap has fallen by 2.7%, from a record high of $141 billion on December 19 to its current level.

USDT’s decline also cost it the third spot in the cryptocurrency market cap rankings, which has now been reclaimed by the rising Ripple (XRP). XRP’s market cap rose to $138.98 billion on Friday as the token gained momentum. Last year, Ripple Labs announced plans to launch Ripple USD (RLUSD), a U.S. dollar-backed stablecoin.

The Downside

While Tether navigates regulatory uncertainty, it still holds a dominant position in the global stablecoin market.