The Crypto Asset Act (MİCA), which was initially announced by the European Union in 2020 and approved by the European Parliament in 2023, became effective on December 30.
Tether, the largest stablecoin USDT, experienced a decrease in its market value by more than 1% due to uncertainties regarding its compliance with MICA regulations.
As a result, Tether saw its largest weekly decline since the FTX crash.
This decision by Tether comes after certain cryptocurrency exchanges in the European Union and Coinbase chose to remove USDT from their platforms due to the EU’s MiCA law.
According to the MİCA regulation, stablecoin issuers must obtain a MiCA license and fulfill specific requirements in order to be publicly traded within the EU. This means that EU-based investors can still hold USDT in non-custodial wallets, but they will not be able to trade on MİCA-compliant centralized exchanges.
Considering the significant role of USDT in the crypto market, this decline has raised speculation that a broader market downturn might be imminent. However, analysts have pointed out that the impact of Tether’s decline may be limited to Europe.
Karen Tang, the head of APAC at Orderly Network, stated that the MICA regulation will not negatively impact USDT’s market dominance.
“The MiCA regulations are not expected to harm USDT’s market dominance, as the majority of USDT trading volume occurs in Asia and the USA. These regulations will slow down digital asset innovation in the EU, which is already hindered by excessive regulation.”
Cryptocurrency analyst Bitblaze noted that the majority of Tether’s trading volume takes place in Asia and mentioned that the delisting decision by Coinbase and European exchanges due to MiCA will have a minimal impact on Tether.
“USDT is the largest stablecoin with a market capitalization of $138.5 billion and a daily trading volume of $44 billion. Currently, 80% of USDT’s trading volume originates from Asia, so delisting in the EU will not significantly affect its market dominance.”
*This translation does not constitute investment advice.
