Tether (USDT), the world’s largest USD-backed stablecoin, has faced its biggest weekly market value decline in two years. During this period, the market value of USDT dropped by over 1%, falling to $137.24 billion. This decline marks the most significant drop since the FTX exchange collapse in November 2022.
Background of USDT’s Market Value Decline
The sharp decrease in USDT’s market value followed the decision by European Union-based exchanges and platforms like Coinbase to remove USDT from their services due to MiCA regulations. The MiCA regulations will be fully enforced by December 30, 2024, but rules concerning stablecoins have been in effect for the past six months.
MiCA mandates that stablecoin issuers must obtain licenses to offer or trade assets categorized as “asset-referenced tokens” (ART) or “e-money tokens” (EMT). Tether’s USDT falls under the EMT category, linked to a national currency (the US dollar).
Market Dominance of Asia and the US Continues
Despite these developments, crypto analysts believe the effects will be limited. Karen Tang, responsible for APAC partnerships, argues that the decision will not impact Tether’s market leadership significantly, stating, “The European Union is not the largest cryptocurrency market.” She supports her view by noting that most trading volume occurs in Asia and the US.
Analyst Bitblaze indicates that 80% of Tether’s volume comes from Asia, asserting, “These regulations will not significantly affect Tether.” Currently, USDT maintains its position as the largest stablecoin with a daily volume of $44 billion.
Tether has also been investing in companies like StablR and Quantoz Payments to ensure compliance with MiCA regulations. Experts anticipate that such moves will help maintain USDT’s international leadership without significant damage.
