• Tether’s USDT experiences its largest weekly market cap decline in two years, following delistings tied to EU’s MiCA regulations.
• Analysts argue the impact of USDT delistings in the EU will be limited, as most trading volume comes from Asia and the U.S.

Tether’s USDT, the world’s leading dollar-pegged stablecoin, has seen its steepest weekly decline in market value in two years, sparking concerns over market volatility. The stablecoin’s market capitalization fell by over 1% to $137.24 billion, its most significant drop since the collapse of the FTX exchange in November 2022, according to TradingView. USDT had reached an all-time high of $140.72 billion in mid-December.

This decline coincides with the delisting of USDT by several European Union-based exchanges and Coinbase. The decision was driven by compliance requirements under the EU’s Markets in Crypto-Assets (MiCA) regulations, which took full effect on December 30. MiCA mandates that issuers of stablecoins, classified as asset-referenced tokens (ARTs) or e-money tokens (EMTs), obtain licenses to offer these assets within the EU. While EU-based traders can still hold USDT in non-custodial wallets, they can no longer trade it on MiCA-compliant centralized exchanges.

USDT’s critical role as a gateway to cryptocurrency markets, facilitating spot and derivatives trading, has led to speculation of broader market repercussions.

However, analysts suggest the impact may be geographically limited.

Karen Tang, head of APAC partnerships at Orderly Network, stated on X (formerly Twitter) that the delistings would primarily affect the EU, a region she argued is already hindered by regulatory complexity.

“Access to @Tether_to set to be restricted in the EU due to MiCA regulation isn’t going to harm USDT dominance,” Tang wrote. “Most crypto trading volume occurs in Asia and the U.S. This will only stunt the EU’s digital asset innovation.”

Crypto analyst Bitblaze echoed these sentiments, emphasizing that Asia accounts for 80% of USDT’s trading volume. Bitblaze downplayed the significance of the EU’s delistings, noting that USDT remains the dominant stablecoin with a $44 billion daily trading volume.

In a move to align with MiCA regulations, Tether has invested in MiCA-compliant firms, including StablR and Quantoz Payments, signaling efforts to ensure compliance and maintain its foothold in the European market.

Editorial Note: This news article has been written with assistance from AI. Edited & fact-checked by Harshajit Sarmah.