Tether’s U.S. dollar stablecoin experienced a significant downturn as its market cap decreased by $1.4 billion following the enactment of the EU’s Markets in Crypto-Assets (MiCA) regulation. The stablecoin’s market cap fell from a peak of $140 billion to $137 billion, marking the largest decline since the FTX collapse during the crypto market’s downturn in 2022. This change occurred as the new EU regulations fully took effect on December 30, 2024.
There are mounting concerns that Tether might withdraw from the European market due to the new regulations. However, industry leaders and analysts have weighed in, stating that such fears are baseless. A significant portion of USDT’s market activity—about 80%—occurs in Asia, suggesting the potential impact of MiCA is minimal outside Europe. The analysts emphasized that the regulations might actually slow growth in the EU due to their complexity.
Meanwhile, Tether has been preparing to comply with MiCA by investing in EU-based companies like StablR and Quantoz. Although USDT faced delistings from several EU exchanges, Tether remains committed to the European market. The company is working towards compliance with MiCA, which demands specific licenses from stablecoin operators. Currently, Circle’s USDC is the only major stablecoin operator that has secured a MiCA license. Despite these challenges, traders can still store USDT in non-custodial wallets while Tether navigates the new regulatory landscape.
