USDT, the stablecoin with the largest capitalization on the market, is suffering from the full implementation of the MiCA regulation within the European Union. Tether, the company that issues this cryptocurrency whose price is backed by the US dollar, sees its main competitor, Circle, gaining ground with its stablecoin, USDC.
Tether's stablecoin is in poor shape: the MiCA regulation could not be unrelated
Between December 28 and January 3, USDT, the most capitalized stablecoin in the cryptocurrency market, recorded its largest weekly drop in capitalization for over 2 years.
The cryptocurrency issued by Tether saw its capitalization falling more than 1.7%, from $139.4 billion to around $137 billion. This is the largest drop recorded by the USDT since the week of November 10 to 17, 2022 coinciding with the announcement of the bankruptcy of the FTX exchange. At that time, the capitalization of the stablecoin had fallen by 5.7%.
🔎 Everything you need to know about USDT, the most capitalized stablecoin on the cryptocurrency market
While the USDT had reached a record capitalization during the month of December, flirting with the mark of 141 billion dollarsthis fell by 2.7% in 15 days.
On the left, the evolution of the capitalization of USDT during the month of December 2024. On the right, that during the month of November 2022.
For many analysts, this drop in the capitalization of USDT is partly explained by full implementation of the MiCA regulation within the European Union. Theoretically, since December 30, the stablecoin issued by Tether can no longer be listed on crypto platforms operating on European soil, because cryptocurrency would not comply with the requirements of this new legislative framework.
If certain exchanges like Coinbase or Deskoin have made it no longer possible to buy or sell USDT, others prefer to wait an evolution of the current situation before taking action. They are waiting a clear decision from regulators regarding the Tether stablecoin.
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Circle (USDC) can benefit from USDT's decline in form
The drop in the capitalization of USDT is the business of its main competitor, Circle’s USDC. The stablecoin saw its capitalization increase by 80% in just over a year, going from $24 billion at the end of 2023 to more than 44 billion dollars Today.
For analysts, USDC benefited from the announcement of Donald Trump's victory in the presidential elections, but also the delicate position of USDT within the EU. Indeed, in July, Circle became the first stablecoin issuer in the world. to comply with the MiCA regulationallowing him to offer its cryptocurrencies completely legally on the Old Continent.
📰 Also in the news – Tether (USDT) initiates transfer of several hundred million dollars of Bitcoin (BTC) to its reserve wallet
It is important to note that despite the decline in USDT market capitalization, Tether remains largely safe financially speaking. The company is known for advocating the diversification of its activities, not hesitating to invest to acquire Bitcoin (BTC) or to support companies in sectors sometimes far from the crypto ecosystem.
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Source: CoinGecko
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Surprised by the rise of crypto-assets at the end of the 2010s, I began to closely follow this sector which fascinates me to the greatest extent. When I'm not in football stadiums, rugby stadiums or handball halls, I work on writing relevant articles around cryptocurrencies and more broadly, Web3.
Zacharie Tazrout
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