Overview

Tether's USDT, recognized as the premier dollar-pegged stablecoin globally, has faced its greatest weekly market value drop in the past two years, leading to heightened concerns over market volatility.

• The market cap of USDT decreased by more than 1%, currently at $137.24 billion, marking its largest decline since the FTX exchange fiasco in early November 2022. In mid-December, it reached a high of $140.72 billion.

• Recent regulatory actions have led various European exchanges and Coinbase to remove USDT listings amidst compliance troubles regarding the EU's Markets in Crypto-Assets (MiCA) regulations, which have been in full effect since December 30 despite initial rules being established six months ago.

• The MiCA regulation stipulates that issuers must obtain a MiCA license to publicly trade asset-referenced tokens (ARTs), like USDT, within the EU.

Regulatory Compliance

Traders based in the EU can retain USDT in non-custodial wallets but are barred from trading on MiCA-compliant centralized exchanges. As the primary entry point to cryptocurrency markets, USDT's decline and resultant delistings have triggered discussions of a potential downturn across the broader crypto landscape.

Responses from Industry Leaders

Concerns about the regulatory impact may be overstated, as Karen Tang from Orderly Network stated that restrictions in the EU likely won’t severely affect USDT's dominance, asserting that significant trading volumes are primarily seen in Asia and the U.S. Meanwhile, Bitblaze, a crypto analyst, noted that around 80% of USDT's trading volume originates from Asia, asserting limited repercussions from the EU's decisions.

Conclusion

In light of these events, Tether is making strides to invest in MiCA-compliant companies, including StablR and Quantoz Payments, to align with regulatory standards.