February 27, 2025

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How will MiCA impact Tether (USDT)?

What are the repercussions of MiCA on Tether (USDT)?

Recently, there has been a lot of talk about the MiCA regulatory framework in Europe and its impact on non-compliant stablecoins like Tether (USDT).

This article explores the potential repercussions of the new EU regulation on the future of Tether.

At the moment, there doesn’t seem to be much cause for concern.

The MiCA regulatory framework imposes strict rules for stablecoin issuers

On December 30th, the MiCA (Markets in Crypto Assets) regulation officially went into effect in Europe, introducing new requirements for stablecoin issuers.

This controversial regulatory framework mandates that companies managing their own electronic money must obtain specific licenses under the supervision of the European Banking Authority (EBA). Only banks and authorized financial intermediaries are permitted to trade e-money token (EMT) and asset-referenced-token (ART) going forward.

The regulation also imposes limits on companies like Tether that operate outside the Eurozone’s jurisdiction. Under MiCA, stablecoin issuers must hold the majority of their collateral assets with a European credit institution.

For Tether, this poses a significant challenge as the majority of its reserves (about 83%) are held in US Treasury securities and cash equivalents, not in European credit institutions as required by MiCA.

Complying with this requirement could potentially expose Tether to risks associated with third-party banks and jeopardize the stability and reliability of USDT, leading to a potential depeg.

Given this incompatibility with the MiCA regulation, it is likely that USDT may become illegal in Europe in the future.

What are the implications of MiCA for Tether USDT?

Due to the non-compliance of Tether’s USDT with MiCA, some have speculated that cryptocurrency exchanges might delist the stablecoin.

However, as of now, there have been no delistings except for Coinbase, which supports the competitor Circle and USDC. Binance, the largest exchange by trading volumes, still allows trading, deposits, and withdrawals of USDT.

Other major exchanges like Crypto.com, Bybit, Kraken, and others have not indicated any plans to remove USDT from their platforms.

Exchange platforms have continued to offer USDT trading services independently due to its widespread use and liquidity across different blockchains.

While there are speculations about potential regulatory pressures in the future, there is currently no concrete evidence to support the fear, uncertainty, and doubt (FUD) surrounding Tether.

Tether is also exploring partnerships with MiCA-compliant companies like Quantoz to potentially issue a new legitimate currency in Europe.

Tether targets America and Asia after Europe’s impositions

Despite the challenges posed by MiCA in Europe, Tether’s presence and compliance in that region may not significantly impact its overall business.

Currently, Tether’s largest market share is in Asia, where regulations are more favorable. Asia accounts for the majority of USDT volumes, while North America, Europe, and Africa follow in terms of volume.

Even if Tether were to lose the European market, it would only affect a small portion of its stablecoin sector presence.

Tether is also expanding its reach in America, with recent moves to comply with regulations and strengthen its position in emerging markets like Central America.

USDT leader dei volumi di scambio stablecoin

Despite facing regulatory challenges, Tether remains the dominant stablecoin issuer in the crypto industry.

Since the introduction of the MiCA regulation, Tether’s market capitalization has remained steady, with only a slight decrease in overall market dominance.

Currently valued at $133 billion with a market share of 64.8%, Tether’s success and investor interest have continued to grow over the past year.

On-chain data shows that Tether leads the trading volumes in stablecoin transactions, significantly surpassing its competitors like USDC.

USDT’s volumes remain consistently high, indicating its strong position in the stablecoin market despite regulatory challenges.

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#repercussions #MiCA #Tether #USDT

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