#Tether #USDT
USDT Capitalization Shrinks as MiCA Comes into Force
On December 30, the EU regulation for digital assets MiCA came into force. The market cap of the leading stablecoin USDT fell from over $141 billion in the middle of the month to ~$137.5 billion.
The new rules impose strict requirements for issuers of “stablecoins”, including licensing, reserve and liquidity standards.
Agné Linge from WeFi noted in a commentary for The Block that compliance with the regulation is economically burdensome for large companies in the segment, such as Tether, a diversified business behind USDT.
The new EU law requires that small stablecoin issuers now keep 30% of their reserves in low-risk commercial banks within the EU, while for larger players like Tether the bar is set at 60% or more,”
However, the expert does not expect serious financial consequences for the USDT issuer due to leaving the European Union. The company will receive about $10 billion in profit by the end of the year, has significant cash reserves and diversifies its income through investments, Linge noted.
She also emphasized that most EU countries provide a transition period of six to 18 months to adapt to the rules that have come into force.
Amid regulatory uncertainty, some European crypto exchanges have taken preventive measures. Coinbase Europe has delisted USDT and five other stablecoins.
Competitors Binance and Crypto.com, on the contrary, did not stop supporting the assets. Both platforms preferred to observe the implementation of MiCA and wait for clarification regarding the new rules.
Paybis Chief Revenue Officer Uldis Teraudkalns believes that the law “will transform the EU crypto landscape with far-reaching consequences.” The need to comply with the requirements will force a number of companies out of the union, regardless of their size, he suggested.
The main beneficiaries could be jurisdictions close to the EU, such as the UK and Switzerland. This will depend on how regulatory regimes develop there,” Teraudkalns admitted.
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