Households on the energy price cap will see a 7% reduction in their average annual payments from 1 July, the industry regulator has announced while urging households to seek out the “better deals out there”.
The default cap – which is reviewed every three months – will see a typical household using gas and electricity and paying by Direct Debit stump up an average annual £1,720, Ofgem said.
That is down from the current April-June figure of £1,849 and reflects a reduction in wholesale gas prices.
Money latest: How energy price cap dip will affect me
The lower cap, however, will be £152 higher than the same three-month period last year.
It does not affect the millions of households to have taken a time-limited fixed deal.
Nevertheless, it represents some relief for families grappling with the cost of living aftershock that saw many essential bills rise by well above the rate of inflation last month.
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Cost of living impacts families
Ofgem also confirmed further bill savings through a £19 average cut, from July, in standing charges for households paying by both direct debit and prepayment, following an operating cost and debt allowances review.
The price cap does not limit total bills because householders still pay for the amount of energy they consume.
The watchdog’s announcements were made just days after fresh forecasts suggested that bills linked to the cap could come down further from both October and January, given recent wholesale market price trends.
Industry data specialist Cornwall Insight estimated on Friday that the price cap was currently on course to rise only slightly in October – by less than £1 a month.
Wholesale gas costs last winter had been relatively stable until a cold snap hit much of Europe in January and early February, driving up demand at a time of weaker stocks.
Other risk factors ahead include extended EU gas storage rules and global conflicts, not least the continuing Russia-Ukraine war that sparked the 2022 energy price spike and cost of living crisis in the first place.
Tim Jarvis, director general of markets at Ofgem, said: “A fall in the price cap will be welcome news for consumers, and reflects a reduction in the international price of wholesale gas. However, we’re acutely aware that prices remain high, and some continue to struggle with the cost of energy.
“The first thing I want to remind people is that you don’t have to pay the price cap – there are better deals out there, so it’s important to shop around, and talk to your existing supplier about the best deal they can offer you. And changing your payment method to direct debit or smart pay as you go can save you up to £136.”
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Economy must be ‘strong enough’ for U-turn on winter fuel payments
Ofgem said that a minority of homes, 35%, were on a fixed rate deal.
Price comparison sites lined up after the price cap announcement to urge households still on the default tariff to investigate a switch.
Tom Lyon, director at Compare the Market said: “If anyone is worried about potentially higher energy bills later this year, they could consider locking in a fixed rate deal now.
“Fixed rate deals also protect you from price hikes if the oil and gas markets are volatile. Beyond your energy bills, it’s important to search and compare other household bills, such as your car insurance, credit cards, or broadband, to see if you can make savings.”
Is Tether MiCA compliant?
The EU’s new Markets in Crypto-Assets regulation, better known as MiCA, is the first major attempt by a global economic power to create clear, region-wide rules for the crypto space, and stablecoins are a big focus.
MiCA mandates best practices. If a stablecoin is going to be traded in the EU, its issuer has to follow some stringent rules:
1. You need a license
To issue a stablecoin in Europe, you must become a fully authorized electronic money institution (EMI). That’s the same kind of license traditional fintechs need to offer e-wallets or prepaid cards. It’s not cheap and it’s not quick.
2. Most of your reserves have to sit in European banks
This is one of the most controversial parts of MiCA. If you issue a “significant” stablecoin — and Tether’s USDT certainly qualifies — at least 60% of your reserves must be held in EU-based banks. The logic is to keep the financial system safe.
3. Full transparency is non-negotiable
MiCA requires detailed, regular disclosures. Issuers have to publish a white paper and provide updates on their reserves, audits and operational changes. This level of reporting is new territory for some stablecoins, especially those that have historically avoided public scrutiny.
4. Non-compliant coins are getting delisted
If a token doesn’t comply, it won’t be tradable on regulated EU platforms. Binance, for example, has delisted USDT trading pairs for users in the European Economic Area (EEA). Other exchanges are following suit.
The European Securities and Markets Authority (ESMA) clarified that people in Europe can still hold or transfer USDT, but it can’t be offered to the public or listed on official venues.
In other words, you might still have USDT in your wallet, but good luck trying to swap it on a regulated platform.
Key reasons why Tether rejects MiCA regulations
Tether is unique in that it has explained why it wants nothing to do with MiCA regulations. The company’s leadership, especially CEO Paolo Ardoino, has been pretty vocal about what they see as serious flaws in the regulation, from financial risks to privacy concerns to the bigger picture of who stablecoins are really for.
1. The banking rule could backfire
One of MiCA’s most talked-about rules says that “significant” stablecoins — like Tether’s USDt (USDT) — must keep at least 60% of their reserves in European banks. The idea is to make stablecoins safer and more transparent. But Ardoino sees it differently.
He’s warned that this could create new problems, forcing stablecoin issuers to rely so heavily on traditional banks could make the whole system more fragile.
After all, if there’s a wave of redemptions and those banks don’t have enough liquidity to keep up, we’d witness a struggling bank and a stablecoin crisis simultaneously.
Instead, Tether prefers to keep most of its reserves in US Treasurys, assets it says are liquid, low-risk and much easier to redeem quickly if needed.
2. They don’t trust the digital euro
Tether also has a broader issue with the direction Europe is heading, especially regarding a digital euro. Ardoino has openly criticized it, raising alarms about privacy.
He has argued that a centrally controlled digital currency could be used to track how people spend their money, and even control or restrict transactions if someone falls out of favor with the system.
Privacy advocates have echoed similar concerns. While the European Central Bank insists that privacy is a top priority (with features like offline payments), Tether isn’t convinced. In their eyes, putting that much financial power in the hands of one institution is asking for trouble.
3. Tether’s users aren’t in Brussels. They’re in Brazil, Turkey and Nigeria
At the heart of it, Tether sees itself as a lifeline for people in countries dealing with inflation, unstable banking systems and limited access to dollars.
These are places like Turkey, Argentina and Nigeria, where USDT is often more useful than the local currency.
MiCA, with all its licensing hoops and reserve mandates, would require Tether to shift focus and invest heavily in meeting EU-specific standards. That’s something the company says it’s not willing to do, not at the expense of the markets it sees as most in need of financial tools like USDT.
Did you know? Turkey ranks among the top countries for cryptocurrency adoption, with 16% of its population engaged in crypto activities. This high adoption rate is largely driven by the devaluation of the Turkish lira and economic instability, prompting citizens to seek alternatives like stablecoins to preserve their purchasing power.
What happens when Tether doesn’t comply with MiCA
Tether’s decision to skip MiCA didn’t exactly fly under the radar. It’s already having real consequences, especially for exchanges and users in Europe.
Exchanges are dropping USDT
Big names like Binance and Kraken didn’t wait around. To stay on the right side of EU regulators, they’ve already delisted USDT trading pairs for users in the European Economic Area. Binance had removed them by the end of March 2025. Kraken followed close behind, removing not just USDT but also other non-compliant stablecoins like EURT and PayPal’s PYUSD.
Users are left with fewer options
If you’re in Europe and holding USDT, you’re not totally out of luck; you can still withdraw or swap it on certain platforms. But you won’t be trading it on major exchanges anymore. That’s already pushing users toward alternatives like USDC and EURC, which are fully MiCA-compliant and widely supported.
Even major crypto payment processors are pulling support, leaving users with fewer options for spending their crypto directly.
A hit to liquidity? Probably.
Pulling USDT from European exchanges could make the markets a bit shakier. Less liquidity, wider spreads and more volatility during big price moves are all on the table. Some traders will adjust quickly. Others? Not so much.
Did you know? Tether (USDT) is the most traded cryptocurrency globally, surpassing even Bitcoin in daily volume. In 2024, it facilitated over $20.6 trillion in transactions and boasts a user base exceeding 400 million worldwide.
Tether vs MiCA regulation
Tether may be out of sync with the EU, but it’s far from retreating. If anything, the company is doubling down elsewhere, looking for friendlier ground and broader horizons.
Firstly, Tether’s picked El Salvador as its new base, a country that has fully embraced crypto. After getting a digital asset service provider license, the company is setting up a real headquarters there. Ardoino and other top execs are making the move too.
Moreover, after banking over $5 billion in profits in early 2024, Tether is putting its capital to work:
- AI: Through its venture arm, Tether Evo, the company has picked up stakes in firms like Northern Data Group and Blackrock Neurotech. Tether has also launched Tether AI, an open-source, decentralized AI platform designed to operate on any device without centralized servers or API keys. The goal is to use AI to boost operations and maybe build some new tools along the way.
- Infrastructure and AgTech: Tether invested in Adecoagro, a company focused on sustainable farming and renewable energy. It’s a surprising move, but it fits Tether’s bigger strategy of backing real-world, resilient systems.
- Media and beyond: There are also signs Tether wants a footprint in content and communications, signaling it’s thinking far beyond crypto alone.
Tether’s MiCA exit highlights crypto’s global regulatory chaos
Tether walking away from MiCA is a snapshot of a much bigger issue in crypto: How hard it is to build a business in a world where every jurisdiction plays by its own rulebook.
The classic game of regulatory arbitrage
This isn’t Tether’s first rodeo when it comes to navigating regulations. Like many crypto companies, they’ve mastered the art of regulatory arbitrage, finding the friendliest jurisdiction and setting up shop there.
Europe brings in strict rules? Fine, Tether sets up in El Salvador, where crypto is welcomed with open arms.
However, it does raise questions. If big players can simply move jurisdictions to dodge regulations, how effective are those rules in the first place? And does that leave retail users protected or just further confused?
A crypto world that’s all over the map
The bigger issue is that the global regulatory landscape is incredibly fragmented. Europe wants full compliance, transparency and reserve mandates. The US is still sending mixed signals. Asia is split; Hong Kong is pro-crypto, while China stays cold.
Hong Kong has also passed the Stablecoin Bill to license fiat-backed issuers and boost its Web3 ambitions. Meanwhile, Latin America is embracing crypto as a tool for financial access.
For companies, it’s a mess. You can’t build for one global market; you must constantly adapt, restructure or pull out entirely. For users, it creates massive gaps in access. A coin available in one country might be inaccessible in another just because of local policy.
As a final thought: Tether’s resistance to MiCA seems to be more than just a protest against red tape.
It’s making a bet that crypto’s future will be shaped outside Brussels, not inside it.
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