Does regulation bite at gateways? Evidence from MiCA and stablecoins

Trading venues are gateways where regulation can change tradable assets. We study this margin using MiCA—EU’s Markets in Crypto-Assets Regulation—which led several exchanges to delist USDT for European users, while USDC obtained MiCA authorization. First, comparing Regulated-facing exchanges with globally oriented exchanges where MiCA is less likely to bind, we show that USDC’s share of USDT–USDC trading rises by 0.82 pre-event standard deviations. Second, relative USDC–USDT volume rises by 0.54 as exchange-level USDT activity contracts on Regulated-facing venues. Third, aggregate market shares and trading volumes barely move, consistent with USDT network effects or differentiation between stablecoins.