DailySun
Tether’s U.S. dollar-pegged stablecoin has faced its largest decline since the FTX incident during the slow crypto market of 2022.
On-chain analysis indicated that Tether’s stablecoin (USDT) experienced a loss of around 1.2% in market capitalization this week, coinciding with the full implementation of EU digital asset regulations on December 30.
The market cap of the token reduced to $137 billion from its peak of $140 billion in December, sparking discussions about Tether’s future and the potential volatility of USDT. Concerns emerged regarding whether Tether’s operator might exit the European Union with new regulations coming into effect.
Nevertheless, sentiments on social media were countered by industry experts and analysts, who highlighted data supporting USDT’s stability outside of the EU.
No significant issues
Industry professionals and analysts have refuted claims that the EU’s Markets in Crypto-Assets Regulation would adversely impact USDT’s operations. Karen Tang, head of APAC partnerships at Orderly Network, and social media analyst Axel Bitblaze, pointed out that USDT continues to dominate in Asian and U.S. markets.
According to Bitblaze, around 80% of USDT’s trading volume is generated in Asia. Tang asserted that MiCA regulations are more likely to hinder the EU itself, potentially stifling digital asset development due to “overly complex regulation.”
Tether strategizes for MiCA compliance
Concerns regarding USDT’s future in the EU grew in late 2024 after Coinbase and multiple EU-based exchanges delisted USDT, citing worries over compliance with MiCA regulations. Although stablecoin guidelines were enacted in July, the complete MiCA framework was not fully effective until year-end.
MiCA mandates stablecoin operators to possess specific licenses for electronic money tokens and asset-referenced tokens, such as USDT. So far, Circle (USDC) is the first and only significant stablecoin issuer to secure a MiCA license.
Tether invested in European companies like StablR and Quantoz to ensure readiness for regulatory inclusion. CEO Paolo Ardoino has reiterated that the company intends to remain committed to the EU. While USDT is not currently tradable on MiCA-compliant exchanges, traders can still hold the stablecoin in non-custodial wallets as a temporary solution.
