The European ban alone is unlikely to cause a collapse of USDT (Tether), for several reasons:
1. Global User Base: USDT is the most widely used stablecoin globally, and is very popular outside of Europe, especially in Asia and America.
2. Size and Liquidity: Tether has huge reserves and high liquidity that make it able to withstand regulatory pressures in a given region.
3. Market Alternatives: Even with the EU ban, European traders can continue to use USDT via non-EU platforms.
4. Move towards alternative stablecoins: If USDT faces significant pressure in Europe, more businesses and users may adopt alternative stablecoins, affecting its dominance but not necessarily leading to its collapse.
However, the ban may result in:
Partial decline in liquidity in European markets.
Increased price volatility in the short term.
Pressure on Tether to comply with European laws if it wants to return.