Impact of MiCA Regulation
Tether, the largest stablecoin by market capitalization, has shed 1.4 billion dollars from 140 billion dollars to 137 billion dollars after the EU’s Markets in Crypto-Assets regulation went into full effect on Dec. 30. The slump is Tether’s biggest market cap decline since the crypto crash of 2022. The slump has increased speculations that the exit of Tether from the European Union may be imminent over regulatory hurdles.
Market Fears Allayed By Industry Leaders
Yet industry leaders and analysts remain so sure that MiCA will not rattle Tether’s market dominance. According to Karen Tan, head of APAC partnerships at Orderly Network, 80% of USDT trading happens in Asia, where the token is very well-entrenched. Tan opines that MiCA’s unwieldy regulatory regime may hurt digital asset growth in the EU but is unlikely to impact Tether’s operations worldwide.
Axel Bitblaze, a prominent social media analyst, echoed Tang’s sentiments, highlighting that the stablecoin’s demand in the U.S. and Asian markets ensures its resilience despite potential EU setbacks.
Preparing for MiCA Compliance
Under MiCA, the issuers of such stablecoins should obtain licenses to operate in the EU. Tether has already partly invested in compliance with licenses, adding EU-based companies StablR and Quantoz for its partnership. Tether’s chief executive officer, Paolo Ardoino, recently reiterated once again that this company isn’t planning on abandoning Europe and is active in striving for alignment in regulations.
While strict, the regulations of MiCA allow USDT users to hold and manage the stablecoin in non-custodial wallets, providing a temporary workaround as Tether works its way around the new regulatory regime.
USDT’s Global Outlook
Initial concerns were raised when USDT was threatened with delisting from Coinbase and a handful of EU-based exchanges in the face of non-compliance with MiCA, but many analysts have since maintained that this would have little consequence for Tether’s long-term market position. The more strict policies of the EU may only isolate its market from the broader crypto growth as the stablecoin remains very dominant in both Asia and the U.S.
As Tether is investing in compliance and diversification, the stablecoin seems well-placed to overcome the challenges of MiCA and retain its leadership globally.
