Tether’s U.S. dollar stablecoin has experienced its most significant decline since the FTX fallout amidst the sluggish crypto market of 2022.
Recent on-chain data indicates that Tether’s stablecoin (USDT) faced a market cap reduction of about 1.2% this week, coinciding with the full implementation of EU digital asset regulations on December 30.
The market cap decreased from its December high of $140 billion to $137 billion, igniting discussions regarding Tether’s prospects and possible USDT instability. There are rising concerns that the operator of USDT may withdraw from the European Union following the introduction of new legislation.
Nevertheless, the prevailing sentiment on social media was counterbalanced by insights from industry experts who provided data supporting USDT’s stability outside the EU.
Nothing burger
Industry analysts and experts have dismissed concerns that the EU’s Markets in Crypto-Assets Regulation would negatively impact USDT’s operations. Karen Tang, Orderly Network’s head of APAC partnerships, along with social media analyst Axel Bitblaze, highlighted that USDT continues to dominate in Asian and U.S. markets.
According to Bitblaze, around 80% of USDT’s trading volume occurs in Asia. Tang suggested that the MiCA regulations might pose more challenges for the EU itself, potentially stifling digital asset growth due to “excessive overregulation.”
Tether plots MiCA compliance
Speculation regarding USDT’s future in the EU heightened in late 2024 after some exchanges, including Coinbase, delisted USDT due to concerns about compliance with MiCA regulations. While stablecoin regulations commenced in July, the complete MiCA framework became effective at the year’s close.
MiCA necessitates that stablecoin operators secure specific licenses for e-money tokens and trading asset-referenced tokens, including USDT. Circle (USDC) has emerged as the first and only major stablecoin issuer to receive a MiCA license to date.
Tether has invested in EU-based firms like StablR and Quantoz to work towards compliance with regulations. CEO Paolo Ardoino reiterated that the company does not plan to disengage from the EU. Although USDT is currently not tradable on MiCA-compliant exchanges, traders can still hold the stablecoin in non-custodial wallets as a temporary measure.
