The Crypto Asset Act (MİCA), which was initially introduced by the European Union in 2020 and approved by the European Parliament in 2023, became effective on December 30.
As the compliance of the largest stablecoin USDT with MICA regulations remains uncertain, Tether’s market value has dropped by over 1%.
This decline marks Tether’s largest weekly decrease since the FTX crash.
Tether’s decision comes in response to several cryptocurrency exchanges in the European Union and Coinbase opting to remove USDT from their listings due to the EU’s MiCA law.
In accordance with the MİCA regulation, stablecoin issuers must obtain a MiCA license and fulfill specific requirements to be publicly traded within the EU. Consequently, EU-based investors will still be able to hold USDT in non-custodial wallets, but they will not have the ability to trade on MİCA-compliant centralized exchanges.
Considering USDT’s significant role in the crypto market, this decline has sparked speculation that a broader market downturn may be imminent. Nevertheless, analysts have pointed out that the decrease in Tether’s value could be restricted to Europe.
Karen Tang, the Head of APAC at Orderly Network, stated that the MICA regulation will not negatively impact USDT’s market dominance.
“MiCA regulations are not expected to undermine USDT’s market dominance since the largest volume of USDT transactions occurs in Asia and the USA. These regulations impede digital asset innovation in the EU, which is already hindered by excessive regulation.”
Bitblaze, a cryptocurrency analyst, highlighted that the majority of Tether’s trading volume takes place in Asia and expressed that Coinbase and European exchanges’ decision to delist USDT due to MiCA will have a minimal impact on Tether’s market position.
“USDT, with a market capitalization of $138.5 billion and a daily trading volume of $44 billion, is the largest stablecoin. Currently, 80% of USDT’s trading volume originates from Asia, so the delisting in the EU will not significantly affect its market dominance.”
*This translation does not constitute investment advice.