Key Notes
- EU’s MiCA regulations have prompted several EU-based exchanges, including Coinbase, to delist Tether’s USDT amid compliance issues.
- The regulations classify USDT as an e-money token (EMT), which is now under tighter restrictions.
- Industry leaders warn that Tether’s potential exit from Europe could harm the EU’s competitiveness, particularly in the global crypto market.
The world’s largest stablecoin issuer Tether has witnessed its USDT
USDT
$1.00
24h volatility:
0.1%
Market cap:
$137.31 B
Vol. 24h:
$48.37 B
market cap drop sharply soon as Europe’s crypto regulatory framework Markets in Crypto Assets (MiCA) goes live. This is the sharpest weekly decline in the USDT market cap in two years, following the FTX crash in November 2022. This has also led to concerns regarding market volatility moving ahead.
This week, the Tether (USDT) market cap dropped by 1% to $137 billion from the record high of $140 billion it touched in mid-December. Following the EU’s MiCA regulatory implementation in December end, several EU-based crypto exchanges, including Coinbase, announced plans to delist USDT amid the compliance issues.
Although the stablecoin rules – governing cryptocurrencies pegged to real-world assets like the dollar – were introduced six months earlier, the regulations now require issuers to obtain a MiCA license to publicly offer or trade asset-referenced tokens (ARTs) or e-money tokens (EMTs) within the EU.
As per the classification under MiCAs, ARTs are crypto assets that maintain a stable value by pegging to another asset such as gold, or other assets, including official currencies. On the other hand, EMTs like Tether’s USDT are pegged to a single national currency that comes under the regulatory framework.
Tether’s Exit Is Europe’s Loss?
However, market analysts predict that Tether’s exit from Europe could be of greater disadvantage to EU as it could further widen the gap with the US crypto market amid Donald Trump’s crypto push.
Crypto industry leaders caution that the implementation of MiCA could reduce market volatility without achieving its intended goals. Additionally, they warn that this might undermine the EU’s attractiveness to global investors looking to establish a presence in Europe.
Access to @Tether_to set to be restricted in the EU due to MiCa regulation isn’t going to harm #USDT dominance. EU isn’t the largest #cryptomarket. Most crypto trading volume occurs in Asia and US. All this will do is stunt the EU’s digital assets innovation, which is already…
— Karen Tang (@KarenxTang) December 27, 2024
EU-based traders can continue holding USDT in non-custodial wallets, but they are unable to trade it on centralized exchanges that comply with MiCA regulations. To maintain its indirect presence in Europe, Tether has invested in other stablecoin issuers like StablR.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
