Will Europe ban Tether ($USDT)?

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As a seasoned crypto investor with a keen eye on regulatory developments, I believe that Europe’s MiCA regulations could significantly impact the European crypto market, particularly in relation to Tether (USDT) and stablecoins.

As the extensive MiCA regulations from Europe are set to take effect by the end of this year, there’s a strong possibility that Tether will no longer be able to function within this region. This raises questions about the implications for Europe and the cryptocurrency sector as a whole.

Tether’s reducing market share

Tether holds the number one position among USD stablecoins globally, generating unprecedented earnings amounting to $4.52 billion during Q1 this year. Nevertheless, its market dominance is waning, currently sitting at approximately 69%. In contrast, Circle’s USDC – a regulated counterpart to USDT – has experienced a surge in popularity, capturing around 11% of the market share.

A significant factor contributing to the potential decrease in usage of Tether’s USDT stablecoin could be the upcoming European MiCA (Markets in Crypto-Assets) regulations for digital assets.

In preparation for upcoming regulations, some cryptocurrency exchanges, including OKX and Kraken, have removed USDT trading pairs from their European markets as a potential response.

Could Europe find itself isolated from crypto?

In the absence of significant competition from Europe’s leading stablecoin, there’s optimism that Euro stablecoins will gain prominence. Given that the Euro is the primary currency in Europe, it’s logical to assume that Euro-backed stablecoins would be a popular choice.

As a researcher studying the global digital currency landscape, I’ve observed that USD stablecoins have held a dominant position in the market, while other currencies have faced challenges in gaining traction. This trend may continue if the current market dynamics persist. However, a regulatory shift could potentially leave Europe in an isolated position if the rest of the world moves in a different direction. In such a scenario, Europe might find itself at the sidelines of this evolving digital currency ecosystem.

An anti-crypto sentiment pervades European banks

In the perspective of European banking industry and financial regulatory bodies, it’s fair to say that a strong opposition towards cryptocurrencies dominates their outlook.

Christine Lagarde, the European Central Bank’s President, has publicly expressed her opinion that cryptocurrencies hold no value. Given her significant regulatory clout, Lagarde might be advocating for their elimination or stringent restriction within Europe.

A CBDC is needed to enforce citizens’ compliance 

Additionally, she advocates for the adoption of a Central Bank Digital Currency (CBDC) within the Eurozone. However, the emergence of popular cryptocurrencies like Bitcoin as competitors isn’t preferable.

As a crypto investor, I can tell you that determining the exact value of a euro following the European Central Bank’s (ECB) recent rate cut is not a straightforward task. The ECB will have to print a substantial amount of new currency to manage the debt rollover in the Eurozone. Therefore, it’s reasonable to anticipate that the euro’s worth could potentially increase significantly due to this monetary expansion. However, it’s essential to remember that the market conditions and various economic factors can influence the euro’s value, making accurate predictions challenging.

Certainly, implementing a central bank digital currency (CBDC) could weaken the purchasing power of every European citizen’s currency, according to Lagarde. Her hope is that this process may be accelerated through the use of CBDCs and discourage people from turning to alternatives like gold, silver, or Bitcoin for safety.

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2024-06-11 14:32