The EU's Cryptoasset Market Regulation Act (MiCA) has now taken effect. Cryptocurrency experts are divided on how this law will affect Tether. Although the market value of USDT has fallen sharply recently, concerns that "Tether may collapse" may be excessive. .
Several influential analysts, including the CEO of Tether, have publicly stated that this kind of "fear, uncertainty and doubt (FUD)" news may be an attempt to trigger panic selling and create "cheap buying" for more investors. Opportunities to advance.
The cryptocurrency community is particularly anxious to observe how it will affect Tether. On the day the MiCA regulations came into effect on December 30 alone, the market value of Tether’s U.S. dollar stablecoin USDT fell by US$2 billion to US$137 billion. As of the time of writing, it had not yet Completely rejuvenated.
In fact, this is the largest drop in USDT's market cap since the collapse of the cryptocurrency exchange FTX, when USDT's market cap dropped by more than 5% in the second week of November 2022. This was seen by some users at the time as a signal of a bear market. Influential analyst Michaël van de Poppe stated, "The cryptocurrency market may crash."
Source: TradingView
Calmly speaking, MiCA does indeed bring some difficulties for Tether. The leading US cryptocurrency exchange Coinbase began restricting USDT in mid-December, but the EU quickly ordered all exchanges to delist USDT.
Additionally, some competitors intuitively believe that the enforcement of MiCA presents an opportunity to capture new market share. Tether's biggest competitor, Circle, saw the market cap of its stablecoin USDC soar by over $1 billion on the day the regulations went into effect.
However, not everyone agrees with this bearish view. For example, analyst Axel Bitblaze claimed:
There is a lot of misinformation about USDT being considered illegal in the EU.
First, holding USDT in the EU is not illegal; secondly, 80% of USDT's trading volume comes from Asia, so even if the EU delists it, there won't be any significant impact. This can be evidenced by USDT's market cap, which only declined by 1.2%.
4/
But Axel, what about USDT trading volume and the depeg?
USDT is the largest stablecoin, with a market cap of $138.5B and a daily trading volume of $44B.
As of today, 80% of USDT's trading volume comes from Asia, so the EU delisting won’t have any severe impact. pic.twitter.com/NjxB2iVLhe
— Axel Bitblaze (@Axel_bitblaze69) December 29, 2024
Axel Bitblaze then compared the panic caused by the enforcement of MiCA to several other USDT incidents, concluding that this kind of FUD will only create "buying opportunities" for smart investors.
Tether CEO Paolo Ardoino agrees with this perspective and advises supporters: "Don't believe FUD news. Competitors are eager to make you believe in non-existent things."
A great thread regarding MiCA regulations, how they apply to stablecoins and specifically to USDt.
tldr: don't believe the FUD. Competitors are just desperate to make you believe things that don't exist.
USDt is safe. We continue. https://t.co/WfA0KLfBKb
— Paolo Ardoino (@paoloardoino) December 30, 2024
Moreover, Tether had long prepared for the enforcement of MiCA. In November last year, the company stopped supporting the euro stablecoin EURT, citing future compliance challenges with MiCA regulations.
However, the company then invested resources in other EU operations to maintain revenue streams. For example, Tether invested in compliant stablecoins.
Crypto lawyer Jonathan Galea posted: "USDT is not the only stablecoin in the EU that does not offer itself to the public. Many other stablecoin issuers do not need to obtain authorization under MiCA — just because someone is not authorized under specific laws does not mean they are not complying with those laws."
If a hard (and incorrect) approach is taken, only allowing crypto asset service providers (CASP) to trade stablecoins authorized under MiCA, it would severely damage liquidity in the EU market.
In fact, MiCA will limit the ability of exchanges to offer stablecoins, but it will not blame Tether itself. It is likely that Tether will never be able to meet MiCA compliance because to comply with MiCA regulations, USDT reserve assets must be held in EU banks.
Most importantly, the size of the European market is still insufficient for Tether to deposit reserve assets in EU banks, especially considering that most USDT trading occurs in Asia.
"USDT market cap sharply declines! Will the enforcement of the EU MiCA regulations lead to Tether's collapse? Experts: Overthinking it" This article was first published on (Blockcast).
