The main reasons the EU prohibits USDT are as follows:

- Lack of electronic money license: According to the EU's Markets in Crypto-Assets Regulation (MiCA), stablecoin issuers must obtain an electronic money license before offering trading services in EU member states. Tether has not obtained this license, hence it is banned from trading within the EU.

- Lack of transparency in reserves: MiCA requires stablecoin issuers to maintain adequate reserves and undergo rigorous audits to cope with large-scale withdrawals. However, Tether has faced ongoing scrutiny regarding its reserves, and the lack of transparency in its audits makes it difficult for investors and regulators to have confidence.

- Difficulty in transaction monitoring: The USDT trading network is vast, with millions of transactions occurring daily on the Tron blockchain alone. Such a large volume of data makes it challenging for regulators to comprehensively and promptly grasp transaction information, hindering their ability to effectively prevent illegal transactions and financial risks, and making it difficult to meet MiCA's stringent monitoring requirements for stablecoin transactions.

- Excessive trading volume: The MiCA regulation stipulates a daily trading limit of 200 million euros for stablecoins, while USDT's daily trading volume reaches around 50 billion USD, far exceeding the stipulated limit. This enormous trading volume increases regulatory challenges, and in the event of issues, it could have a significant impact on the market.

- Association with illegal activities: Reports indicate that in 2023, USDT was the most frequently used stablecoin for criminal activities such as terrorism financing. The UK's National Crime Agency has also revealed that closed networks used by oligarchs, street gangs, and spies transferred billions of dollars utilizing USDT.