Tether’s market cap sheds $1.4b as MiCA activates

Tether’s US dollar stablecoin suffered its biggest decline since FTX crashed during the subdued 2022 crypto market period.

On-chain data showed Tether’s stablecoin (USDT) lost around 1.2% of its market value this week as EU digital asset regulations came into full force on December 30.

The token’s market cap has fallen to $137 billion from its December peak of $140 billion, fueling speculation about Tether’s future and USDT’s potential volatility. With the new laws coming into force, concerns have arisen that the USDT operator may leave the European Union.

But social media sentiment has been challenged by industry leaders and observers, who point to data confirming USDT’s durability outside the EU.

no burger

Experts and analysts have dismissed rumors that the EU’s Crypto Asset Markets Regulation will disrupt USDT’s business. Karen Tang, head of APAC partnerships at Orderly Network, and social media analyst Axel Bitblaze noted that Asian and US markets continue to dominate USDT.

According to Bitblaze, approximately 80% of USDT’s trading volume occurs in Asia. Tang argued that MiCA regulations are more likely to hinder the EU itself and slow digital asset growth due to “complex over-regulation.”

4/

So what about Axel, USDT transaction volume and depeg?

USDT is the largest stablecoin with a market cap of $138.5 billion and a daily trading volume of $44 billion.

As of today, 80% of USDT’s trading volume comes from Asia, so EU delisting will not have a serious impact. pic.twitter.com/NjxB2iVLhe

— Axel Bitblaze 🪓 (@Axel_bitblaze69) December 29, 2024

Tether plans MiCA compatibility

Speculation about USDT’s future in the EU intensified in late 2024 after Coinbase and several EU-based exchanges delisted USDT, citing MiCA compliance concerns. While stablecoin rules went into effect in July, the entire MiCA framework went into effect by the end of the year.

MiCA requires stablecoin operators to hold certain licenses for trading e-currency tokens and asset-referenced tokens such as USDT. So far, Circle (USDC) is the first and only major stablecoin issuer to receive a MiCA license.

Tether has invested in EU-based companies such as StablR and Quantoz to prepare for regulatory involvement. CEO Paolo Ardoino reiterated that the company has no intention of leaving the EU. While USDT cannot currently be traded on MiCA-compatible exchanges, traders can store the stablecoin in non-custodial wallets as a workaround.