USDT, the world's leading stablecoin, has just seen its sharpest drop in market value in the past two years, as new regulations from MiCA (Markets in Crypto-Assets) come into effect in Europe.



Market value down 1.1% in a week



Tether (USDT) fell more than 1.1% in market capitalization to $137.24 billion, the deepest drop since the FTX exchange collapsed in November 2022. It was only in mid-December that the market capitalization #USDT reached a record high of $140.72 billion, but the event has raised concerns about volatility in the cryptocurrency market.



The main reason is that many exchanges in Europe and Coinbase have removed USDT to comply with the new regulations of #MiCA , especially the terms related to ARTs (Asset-Referenced Tokens) and EMTs (E-Money Tokens).



How does MiCA work?



MiCA, which officially came into effect on December 30, requires stablecoin issuers to have a license to offer or trade in the European Union. However, users can still store USDT in decentralized wallets but cannot trade it on MiCA-compliant centralized exchanges.



Is the impact serious?



However, many experts believe that this impact will be limited in the European region, where cryptocurrency trading volume is not as large as in Asia or the US.


• Karen Tang, head of APAC partnerships at Orderly Network, commented:


“Europe is not the biggest market for crypto. 80% of USDT trading volume takes place in Asia. MiCA regulation only slows down the EU’s digital innovation.”


• Bitblaze, a crypto analyst, added:


“USDT is still the largest #stablecoin with a market cap of $138.5 billion and a daily trading volume of $44 billion. The EU delisting is not enough to affect USDT's position.”



Tether Adapts to MiCA Regulation



In order to meet regulatory requirements, Tether has invested in MiCA-compliant companies such as StablR and Quantoz Payments, which shows that Tether is making efforts to adjust to maintain its position in the European market.



Conclusion: Pressure but no retreat



Despite the challenges posed by MiCA in the EU, USDT remains a major player in the global crypto market. With its dominance in key regions such as Asia and the US, Tether appears to be well-positioned to weather the turmoil. However, the event underscores the importance of adapting to new regulations in a rapidly changing industry.



Will USDT continue to be the mainstay of the crypto market or face more storms? Let's follow the next developments!