Tether’s USDT Market Value Declines to $137.24 Billion Amid MiCA Regulations
Tether's USDT, the leading dollar-pegged stablecoin, has recorded its sharpest weekly decline in market value in two years, raising concerns about market volatility.
Market Value Decline
USDT's market cap decreased over 1% to $137.24 billion this week, marking the most significant drop since the FTX exchange crash in November 2022. The market cap reached a peak of $140.72 billion in mid-December.
Regulatory Impact
The decline follows decisions by several EU-based exchanges and Coinbase (COIN) to remove USDT due to compliance issues with the EU's Markets in Crypto-Assets (MiCA) regulations, which took effect on December 30. These regulations require issuers to obtain a MiCA license for publicly offering or trading asset-referenced tokens (ARTs) or e-money tokens (EMTs) within the EU.
Token Classification
An ART maintains a stable value by referencing another asset, while EMTs reference a single national currency, as USDT does. EU-based traders can hold USDT in non-custodial wallets but cannot trade it on MiCA-compliant centralized exchanges.
Market Role of USDT
USDT serves as a gateway to the crypto market, facilitating spot cryptocurrency purchases and derivatives trading. The delistings and market value drop have led to speculation about a broader downturn in the crypto market.
Expert Opinions
Karen Tang from Orderly Network stated that access restrictions to Tether in the EU due to MiCA regulation will not harm USDT's dominance, as the EU is not the largest crypto market. Most trading volume occurs in Asia and the U.S., and the impact may be limited to the euro area.
Crypto analyst Bitblaze emphasized that 80% of USDT's trading volume comes from Asia, suggesting that EU delistings will not significantly affect the stablecoin's overall performance.
Strategic Investments
Tether has invested in MiCA-compliant firms StablR and Quantoz Payments to ensure regulatory alignment.