The EU is planning a major move with the introduction of MiCA regulations, which could significantly impact the cryptocurrency industry, especially stablecoins.
Companies issuing stablecoins need to obtain an electronic money license and must have sufficient funds; trading also needs to be monitored.
Tether Limited has not met the standards, and the globally used USDT stablecoin is set to disappear from the EU's formal platforms by the end of 2024.
This has caused a stir in the crypto community, and everyone is worried that the market will become chaotic, which will also reduce Europe's attractiveness.
If USDT leaves, it could be a big problem; it is like an anchor in the crypto market, and everyone relies on it, especially during market turbulence when it serves as a safe haven.
Without it, trading will become inconvenient, liquidity will be affected, and EU users may need to switch to fiat currencies or other stablecoins, but whether they can replace USDT is uncertain.
Once liquidity scatters, trading costs will rise. Currently, most crypto trading uses USDT, and if it leaves, trading pairs will be disrupted, price fluctuations may intensify, and investor costs will also increase.
The EU's strict regulations aim to make the market more transparent and prevent financial crime, but some feel the regulations are too harsh, especially for startups and newcomers, squeezing out development opportunities.
Data also shows that investment in European crypto startups has decreased, and investors are not on board with stringent regulations.
Looking at the US, the policies are much more lenient, with Trump supporting cryptocurrencies, and market enthusiasm has returned. If Europe continues down this path, its global competitiveness may be affected.
With overly strict regulations, businesses and talent may flee, jeopardizing Europe's position in the global digital economy.
Once the MiCA regulations are out, some crypto companies may feel that the EU is difficult to navigate, especially those that rely on innovation and speed, who might prefer to go to Asia or the United States, which would reduce the vitality of the European crypto scene.
Liquidity is affected, trading pairs need to change, investors must adapt to new stablecoins or fiat currencies, trading has become more complex, liquidity may also decline, and price discovery is impacted.
Other stablecoins may gain popularity, but compared to USDT, they still fall short. Exchanges and systems will need to adjust, trading pairs and user demand will need to be reassessed, and fees may also rise, putting significant pressure on users.
Investors and institutions must also adapt; companies relying on USDT for cross-border transactions may have to withdraw from Europe to places with looser regulations. Investors may question the stability of the crypto market, leading to higher market uncertainty and volatility.
The crypto market may further fragment, and exchanges and platforms must adapt to new changes, potentially leading to different market structures under varying regulatory systems in different regions.
Global competition, especially among the EU, the US, and Asia, may become more intense.
Overly strict regulation could impact market liquidity, and Europe's competitiveness in the global crypto market may decline. The crypto industry changes rapidly, and the EU needs to find a balance between regulation and innovation, or it may miss the opportunity to lead in the global digital economy.
Overall, USDT's withdrawal is just the beginning of the EU's cryptocurrency regulatory reform. In the future, finding a balance between compliance and innovation will determine Europe's competitiveness and development direction in the global crypto market.
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