The EU's decision to delist USDT (Tether) will undoubtedly have a profound impact on the cryptocurrency market. This decision not only concerns the fate of USDT within the EU but also affects the entire cryptocurrency ecosystem.
Tether (USDT) is one of the top stablecoins globally, with a market capitalization of $139.7 billion. It may struggle to operate in the EU after December 30, 2024.
USDT's influence is undeniable; it's much stronger than those younger competitors like Circle, even surpassing big players like Nike and UPS. From small tech companies in Argentina to major investors on Wall Street, the whole world is using USDT.
But why can't it survive in the EU?
To put it simply, the EU has introduced a new regulation called MiCA, which requires stablecoins like USDT to comply with rules, obtain licenses, and submit white papers. However, USDT has chosen to ignore this, resulting in a ban!
This is no small matter; liquidity will decrease, and volatility will increase, which will also cause headaches for institutions that want to operate smoothly. Look at Circle; they were smart to align early with MiCA, obtaining a license in Paris and promoting USDC as a compliant and safe new option.
As a result, Euro stablecoins will likely become popular, and USDC is set to soar. MiCA has paved the way for the future of web3, but USDT's actions are perplexing. Did it not value the EU market, or is it deliberately avoiding regulation to develop elsewhere?
Our users and investors in the EU need to stay vigilant. When choosing a stablecoin, look for compliance, security, and trust, not just exchange rates. This is a significant matter concerning the future of our crypto world.
For those holding USDT or planning to try stablecoins, you should consider USDC. This is a compliant, forward-looking new option; don't wait until it's banned to regret it.
How many people actually know the difference between USDC and USDT?
USDC (USD Coin) and USDT (Tether) are both stablecoins pegged to the US dollar at a 1:1 ratio, but they differ in several aspects:
1. Issuing entities and regulation:
USDC is jointly issued by Coinbase and Circle, regulated by US financial authorities, and has high transparency.
USDT is issued by Tether Limited, which has historically had many transparency issues. Although it claims that each USDT is backed by dollar reserves, it lacks independent audits and has low transparency.
2. Reserves and transparency:
The reserves of USDC are backed by cash and cash equivalents in the US banking system, and regular audit reports are published to demonstrate the adequacy of its reserves.
The reserve structure of USDT is opaque. Although it claims to have dollar reserves, it lacks third-party audits, resulting in low transparency and trust.
3. Blockchain compatibility:
USDC is primarily based on the Ethereum blockchain and follows the ERC-20 standard, but it also operates on other blockchains such as Algorand and Solana.
USDT is issued on multiple blockchains, including Ethereum, Tron, and Omni, offering broader compatibility.
4. Market acceptance and liquidity:
Due to its early entry into the market, USDT has high liquidity and is widely accepted and used.
Although USDC has lower market acceptance and liquidity than USDT, it is gradually gaining market trust due to its transparency and regulatory compliance.
5. Security:
USDC is considered relatively safer due to its transparency and regulatory compliance.
Due to transparency issues, USDT carries potential risks, such as insufficient reserves or auditing problems.
6. Uses and functions:
Both can be used for trading, investing, lending, collateral, and other financial activities.
USDC may be more suitable for financial activities requiring high security and trust due to its transparency and regulatory compliance.
In summary, although USDC and USDT are both stablecoins, they have significant differences in terms of issuing entities, transparency, regulatory compliance, blockchain compatibility, market acceptance, and security. Users should decide based on their needs and risk tolerance when choosing to use them.
