Tether’s U.S. dollar stablecoin has experienced its largest decline since the collapse of FTX during the lethargic 2022 crypto market.
Recent on-chain data indicates that Tether’s stablecoin (USDT) saw a 1.2% dip in market cap this week, coinciding with the implementation of new EU digital asset regulations on December 30.
The token’s market cap dropped to $137 billion from a December high of $140 billion, sparking speculation around Tether’s future and potential fluctuations in USDT. Concerns were raised about the possibility of Tether exiting the European Union following the enactment of these new laws.
Despite these concerns, industry experts reassured market participants, citing data that reflects USDT’s strong position in markets outside the EU.
Regulatory Impact Overstated
Market analysts have dismissed fears that the EU’s Markets in Crypto-Assets Regulation would severely impact USDT’s operations. Notable market experts remarked that both Asian and U.S. markets continue to bolster USDT’s significance.
It was highlighted that approximately 80% of USDT’s trading volume is generated in Asia. Market professionals noted that the MiCA regulations may inadvertently slow the EU’s digital asset growth due to complex overregulation issues.
Tether’s Path to MiCA Compliance
In late 2024, speculation regarding USDT’s status in the EU heightened as some exchanges, including Coinbase, excluded USDT from their offerings due to compliance worries related to MiCA. While stablecoin regulations began in July, the complete MiCA framework came into force at year-end.
MiCA mandates that stablecoin issuers secure specific licenses for e-money and asset-referenced tokens, with Circle (USDC) being the first major stablecoin issuer to achieve compliance.
Tether has proactively invested in EU-based companies to align with regulatory requirements. The CEO confirmed the company’s commitment to maintaining a presence in the EU, despite the current limitations on USDT trading within MiCA-compliant exchanges. Traders can still utilize non-custodial wallets for temporary storage of the stablecoin.
