Under the EU rules, stablecoins are very much allowed.
They have to abide by EU regulations, which Tehter wasn't interested in doing (and I may have that they add some very valid reasons for setting so).
Tether is actually going to comply by heavily investing in different stable coin called StablR(.com) that is already regulated in EU.
I think they are doing this because they are sure nobody would give them EU license looking deeply at their history.
As for new regulations... they are obviously doing slow cooking of the ''frog'' and I don't see much resistance sadly.
Why is Europe trying to shoot itself in the foot here? It is bending over so much to protect legacy businesses, but it should learn from the USA how to handle emerging financial tools coming to the market. Spoiler alert: They don't ban them, they do subject them to common-sense regulations but they let everything compete on the open market.
They are just puppets doing what their masters are telling them to do, but it's not just EU, it's happening worldwide in different stages.