🌎 USDT Sees Largest Downturn Since FTX Collapse

Tether’s USDT Stablecoin Sees Largest Downturn Since FTX Collapse Amid EU Regulations

Tether’s U.S. dollar stablecoin, USDT, has experienced its biggest downturn since the collapse of FTX in 2022. According to on-chain data, USDT lost approximately 1.2% of its market cap this week as the European Union’s digital asset regulations took full effect on December 30.

The token’s market cap fell to $137 billion from its December peak of $140 billion, sparking concerns about Tether’s future and potential USDT volatility. Industry leaders and observers have countered these concerns, citing data that affirms USDT’s resilience outside the EU.

USDT’s Resilience Amid EU Regulations

Experts and analysts have dismissed rumors that the EU’s Markets in Crypto-Assets Regulation (MiCA) would disrupt USDT’s business. Karen Tang, Orderly Network’s head of APAC partnerships, and social media analyst Axel Bitblaze, have noted that Asian and U.S. markets maintain USDT’s dominance.

About 80% of USDT’s trading volume occurs in Asia, according to Bitblaze. Tang argued that MiCA regulations are more likely to hinder the EU itself, slowing digital asset growth due to “convoluted overregulation.”

As of today, 80% of USDT’s trading volume comes from Asia, so the EU delisting won’t have any severe impact.

Tether’s Compliance Efforts

Speculation about USDT’s future in the EU intensified in late 2024 after Coinbase and several EU-based exchanges delisted USDT, citing MiCA compliance concerns. Tether has invested in EU-based companies such as StablR and Quantoz to prepare for regulatory inclusion.

CEO Paolo Ardoino has reiterated that the company has no intention of abandoning the EU. While USDT cannot currently be traded on MiCA-compliant exchanges, traders can still store the stablecoin in non-custodial wallets as an interim solution.

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