🌎 Tether USDT Market Share Drops Amid EU Regulations and New Rivals

Tether’s USDT stablecoin has seen its market share on centralized exchanges (CEXs) decrease from 82% to 74% this year. This shift underscores the increasing competition in the stablecoin market and the regulatory challenges that Tether might face.

EU Regulations and New Competitors

Despite the drop in market share, Tether (USDT) remains the most widely used stablecoin, boasting a market capitalization of over $100 billion. Its popularity stems from providing a stable, fiat-backed digital currency that facilitates seamless transactions and trading across the cryptocurrency ecosystem.

According to Kaiko Analytics, Tether’s market share decline coincides with the European Union’s preparation to implement the new Markets in Crypto-Assets (MiCA) regulation, which is expected to impact stablecoins like USDT. MiCA will restrict the sale of stablecoins to EU investors, potentially prompting exchanges such as Kraken to reassess their support for USDT.

Tether’s CEO, Paolo Ardoino, has voiced concerns about certain aspects of MiCA’s requirements and indicated that the company has no plans to comply with the new rules in the medium term. This regulatory uncertainty could further reduce Tether’s market share as exchanges and users look for stablecoins that align better with emerging regulatory frameworks.

The market is diversifying with prominent alternatives such as Circle’s USDC gaining traction.

Tether’s Strategic Moves

On July 11, Tether announced its plan to suspend USDT redemptions on several blockchain networks. The company stated that this decision aims to ensure the long-term sustainability of the USDT ecosystem. Tether will phase out support for USDT on multiple networks over the coming months, with specific timelines to be provided separately to ensure a smooth transition for users.

This strategic move is part of Tether’s effort to streamline operations and focus on the most widely adopted blockchain networks. By halting USDT redemptions on less active networks, Tether aims to improve the overall user experience and maintain the stability of the USDT peg.

Developments in the Stablecoin Market

In other news, DWS, a leading European investment firm, has established a new entity to launch Germany’s first cryptocurrency under national regulation. The firm aims to introduce a euro-based stablecoin that is compliant with Germany’s financial watchdog, BaFin, by 2025.

Additionally, Tron (TRX) founder Justin Sun has plans to introduce a fee-free stablecoin, which, if successfully implemented, could significantly impact the stablecoin market.

The stablecoin market continues to evolve, with significant contributions from companies like Coinbase and Circle. Coinbase relies on stablecoin revenue, while Circle’s recent approval to operate in Europe marks an important step towards establishing itself as a global standard in the industry.