Tether’s market cap sheds $1.4b as MiCA activates

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As a seasoned analyst with over two decades of experience in the financial industry, I have seen my fair share of market turbulence and regulatory changes. With that said, I believe the recent downturn in Tether’s U.S. dollar stablecoin is not as dire as some may think.

Having closely followed the crypto market since its inception, I can attest to the resilience of USDT, especially in Asian and American markets. In fact, it’s interesting to note that about 80% of USDT’s trading volume comes from Asia, according to Axel Bitblaze – a testament to the stablecoin’s enduring popularity outside the EU.

While the European Union’s Markets in Crypto-Assets Regulation (MiCA) may have caused some initial concerns, it seems that these fears are largely unfounded. With Tether investing in EU-based companies like StablR and Quantoz to prepare for regulatory compliance, I remain optimistic about the stablecoin’s future within the EU.

That being said, as with any market, there will always be challenges ahead. But as we all know, the crypto world loves a good comeback story – and Tether has proven itself to be quite the resilient player in this ever-evolving landscape.

In closing, let me leave you with a little joke: Why did the stablecoin cross the road? To prove it wasn’t all hype!

During the slow 2022 cryptocurrency market, Tether’s US dollar stablecoin experienced its most significant drop since FTX’s collapse.

This week, on-chain information indicated a decrease of around 1.2% in the market value of Tether’s stablecoin (USDT), due to the complete implementation of EU digital asset regulations on December 30.

The market value of the token decreased from its December high of $140 billion to $137 billion, sparking discussions about Tether’s future and possible fluctuations in USDT. There has been worry that due to recent EU laws, the operator of USDT might decide to leave the European Union.

Nevertheless, some industry experts and observers challenged the social media opinion by referring to data highlighting USDT’s robustness beyond the European Union.

Or:

While social media showed skepticism, industry leaders and observers cited evidence of USDT’s strength in regions outside the EU.

Nothing burger

Experts and analysts have refuted claims that the EU’s Markets in Crypto-Assets Regulation could negatively impact Tether’s (USDT) operations. Karen Tang, who heads APAC partnerships at Orderly Network, along with social media analyst Axel Bitblaze, stated that both Asian and U.S markets continue to reinforce USDT’s market dominance.

Approximately 80% of transactions involving USDT (Tether) take place in Asia, as per Bitblaze’s data. On the other hand, Tang posits that the MiCA regulations could potentially hamper the EU’s own growth by stifling the expansion of digital assets through complex overregulation.

4/

Hey Axel, what about US Dollar Tether (USDT) trading volume and the potential depeg?

USDT is the leading stablecoin, boasting a market capitalization of $138.5 billion and daily trading volume of approximately $44 billion.

Currently, 80% of USDT’s trading volume originates from Asia, which means that the delisting in the EU won’t have any significant consequences.

— Axel Bitblaze 🪓 (@Axel_bitblaze69) December 29, 2024

Tether plots MiCA compliance

As a crypto investor, I found myself closely watching the developments surrounding Tether (USDT) in the European Union towards the end of 2024. This heightened interest was sparked by the delisting of USDT by Coinbase and several other EU-based exchanges, who cited MiCA compliance concerns as their reason. Although the initial stablecoin rules were implemented back in July, it wasn’t until the end of the year that the complete MiCA framework went into effect. This regulatory shift has certainly added an intriguing layer to my investment strategy.

According to MiCA regulations, operators of stablecoins such as USDT are required to have specific licenses for e-money tokens and trading assets that reference other assets. So far, Circle, the primary issuer of USDC, is the first and only significant stablecoin provider to secure a MiCA license.

Tether made investments in European firms like StablR and Quantoz to ensure readiness for regulatory acceptance. The CEO, Paolo Ardoino, has emphasized that the company remains committed to the EU. Although USDT cannot be traded on exchanges complying with MiCA regulations at the moment, traders can temporarily hold the stablecoin in non-custodial wallets as a temporary solution.

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2025-01-02 20:06