Tether (USDT) suffered its biggest drop in market value in two years after being removed from exchanges in the region due to the European Union’s MiCA regulations. However, despite the bans in Europe, Tether continues to lead the market thanks to its dominant position in the Asian and US markets. Tether aims to maintain its global leadership by making various investments to comply with European regulations.
Tether (USDT), the world’s largest US dollar-backed stablecoin, suffered its biggest weekly market cap loss in two years. During this period, USDT’s market value fell by over 1% to $137.24 billion. This decline was recorded as the biggest decline since the FTX exchange crash in November 2022.
The USDT loss comes after European Union-based exchanges and platforms like Coinbase decided to remove USDT from trading due to MiCA regulations. The MiCA regulations will come into full effect on December 30, 2024, but the rules for stablecoins came into effect six months ago. MiCA requires stablecoin issuers to obtain a license to offer or trade “asset-backed tokens” (ART) or “e-money tokens” (EMT). Tether’s USDT falls into the EMT category because it is valued against a national currency like the US dollar.
The regulations prohibit trading of USDT on European Union-based exchanges, while users are allowed to hold USDT in wallets they control. These restrictions have sent volatility through the cryptocurrency market and raised expectations of an overall market decline.
Asia and US Market Dominance Continues
Cryptocurrency analysts and experts believe that the effects of the MiCA regulations will be limited. Karen Tang, who is responsible for APAC partnerships, stated that the European Union is not the world's largest cryptocurrency market, and said, "The majority of cryptocurrency trading volume occurs in Asia and the US." Analyst Bitblaze, on the other hand, stated that 80% of Tether's volume comes from the Asian market, and therefore the regulations will not cause a significant impact on Tether. Currently, USDT continues to lead the market as the largest stablecoin with a daily trading volume of $ 44 billion.
Tether has started investing in companies like StablR and Quantoz Payments to comply with MiCA regulations. These steps are being taken to comply with regulations in the European Union. Experts believe that such strategic investments will help USDT maintain its global leadership.
