Crypto.com Delists USDT Trading Pairs as Regulators Increase Scrutiny of Centralized Exchange

Crypto.com, one of the most popular cryptocurrency exchanges, announced that it will delist all USDT trading pairs, transactions, deposits, and withdrawals by 1 p.m. ET on January 31. Any remaining USDT user deposits on the exchange after that time will be converted to Circle-issued USDC. This move is likely to have a significant impact on the cryptocurrency market and the stablecoin landscape.

The decision to delist USDT comes as regulators around the world are increasing their scrutiny of centralized exchanges in the wake of the collapse of FTX. The Canadian Securities Administrators (CSA), the country’s top securities regulatory body consisting of regulators from 10 provinces and three territories, said last month that it would strengthen its oversight over crypto exchanges by “expanding existing requirements" for trading platforms operating in the country. The CSA also said that it “continues to monitor and assess the presence and role of stablecoins in Canadian capital markets," according to a press release. This increased scrutiny from regulators is likely to make it more difficult for centralized exchanges to operate, especially when it comes to stablecoins like USDT.

USDT is the most popular stablecoin with a market capitalization of $66 billion, and it competes with USDC ($44 billion market cap) and the Paxos-issued Binance USD ($16 billion market cap). The token is an integral tool for the cryptocurrency market to facilitate trading, but controversies around its issuer, Tether, and the assets that supposedly back its value have abounded for as long as it has been around. The CSA's decision to increase oversight of stablecoin is likely to be motivated by these controversies.

The delisting of USDT by Crypto.com is a significant move, not only for the exchange but also for the entire stablecoin market. It is likely to result in a reduction in the use of USDT for trading, and a corresponding increase in the use of USDC and Binance USD. This could have a significant impact on the market capitalization of each stablecoin. It also may change the way traders use stablecoins in their trading activities.

In addition, historically, Canadian digital-asset trading platforms have been reluctant to list USDT, with Coinberry and Wealthsimple prohibited it from their platforms as per the documents filed to the CSA in 2021. This delisting is not only a sign of the regulators scrutiny but also a reflect of the market trends.

Overall, the decision by Crypto.com to delist USDT trading pairs is a sign of the changing regulatory landscape for centralized exchanges and stablecoins. As regulators around the world increase their scrutiny of the crypto market, we can expect to see more moves like this from exchanges. As the landscape evolves, traders and investors need to stay informed about the latest developments and adjust their strategies accordingly.