Tether (USDT) Market Cap Drops 1% to $137 Billion Amid MiCA Launch
Tether, the largest stablecoin issuer, has experienced a significant decline in its USDT market cap, dropping 1% to $137 billion from a peak of $140 billion in mid-December. This marks the sharpest weekly decline in two years, coinciding with the launch of Europe’s Markets in Crypto Assets (MiCA) regulatory framework. Concerns about future market volatility have arisen following this drop.
With the MiCA regulations now in effect, several EU-based exchanges, including Coinbase, have announced plans to delist USDT due to compliance issues. Although stablecoin rules were introduced six months prior, issuers must now obtain a MiCA license to offer or trade asset-referenced tokens (ARTs) or e-money tokens (EMTs) within the EU.
Under MiCA, ARTs maintain stable values by pegging to assets like gold or national currencies, while EMTs, such as Tether's USDT, are pegged to a single national currency and fall under this regulatory framework.
Tether's Exit May Impact Europe
Market analysts suggest that Tether's exit from Europe could disadvantage the EU, potentially widening the gap with the US crypto market amid ongoing developments in US crypto policy. Industry leaders warn that MiCA's implementation might reduce market volatility without achieving its goals, which may decrease the EU's appeal to global investors.
Access to @Tether_to set to be restricted in the EU due to MiCa regulation isn’t going to harm #USDT dominance. EU isn’t the largest #cryptomarket. Most crypto trading volume occurs in Asia and US. All this will do is stunt the EU’s digital assets innovation, which is already…
— Karen Tang (@KarenxTang) December 27, 2024
EU traders can still hold USDT in non-custodial wallets but cannot trade it on centralized exchanges adhering to MiCA regulations. To sustain its indirect presence in Europe, Tether has invested in other stablecoin issuers like StablR.