USDT Cryptocurrency Deregulation in the EU: Reasons and Implications
The European Union has announced a decision to delist Tether (USDT) from all European exchanges by December 30, 2024, as part of the Markets in Crypto-Assets (MiCA) Regulation, which requires stablecoins to obtain an e-money license to operate within the EU.
Reasons for the decision:
Enhancing transparency and combating financial crime: The new regulations aim to enable regulatory authorities to better understand cryptocurrency flows, as well as enhance efforts to combat crimes such as money laundering.
Regulatory Compliance: Tether has not received the necessary authorization to operate within the European Union, which has led to regulated exchanges being asked to delist the USDT stablecoin before the specified date.
Possible implications:
Low Liquidity: Tether’s exit poses a direct threat to liquidity in European crypto markets, where USDT forms the backbone of many trading operations.
Moving activity to other markets: A large share of cryptocurrency trading is expected to move to markets such as the United States and Asia, which offer a more lenient regulatory environment compared to the European Union.
Impact on prices: Lack of liquidity can lead to greater volatility in cryptocurrency prices, negatively impacting market stability.
Alternative stablecoins:
With USDT out, other stablecoins may see increased usage within European markets, such as:
USDC (USD Coin): A stablecoin backed by the US dollar, known for its regulatory compliance.
DAI: A decentralized stablecoin managed by MakerDAO, pegged at $1.
conclusion:
The EU’s decision to delist USDT is a step towards regulating the cryptocurrency market and enhancing transparency. However, this decision may lead to challenges related to liquidity and market stability in the short term, requiring investors and institutions to prepare for radical changes in the market.
Sources: Al Arabiya Business Channel