European Union’s New Crypto-Asset Regulations Take Effect: Uncertainty Surrounds Tether’s Future

MiCA in Effect in Europe, but Tether’s USDT Future Remains Uncertain

The European Union’s Markets in Crypto-Assets (MiCA) Act has officially taken effect, sparking uncertainty regarding the future of Tether’s USDT stablecoin. The regulatory framework imposes strict requirements on stablecoin issuers, which could lead to major players like Tether withdrawing from the region.

Under MiCA, smaller stablecoin issuers must maintain 30% of their reserves in low-risk commercial banks within the EU, while larger entities such as Tether must keep 60% or more. These reserve and liquidity directives may prove challenging for Tether due to its massive market capitalization of $137.55 billion and widespread adoption.

As a result, the company’s global prominence and substantial market capitalization make it less likely to face an immediate financial shock if it exits the EU. However, analysts anticipate that MiCA could prompt both small and large companies to exit the EU market, foster market integration, and increase operational and investment costs.

Despite potential regional disruptions, Tether’s operations remain robust. “Tether is on track to end the year with $10 billion in earnings,” said Agne Linge, WeFi’s Head of Growth, highlighting the company’s high-profit margins. Additionally, Tether has optimized its significant cash reserves to diversify its product offerings and investments, reducing risks associated with its stablecoin portfolio.

It remains unclear whether Tether will choose to exit the European market or comply with the new regulations, particularly after Coinbase Europe removed stablecoins such as USDT from its platform, while Binance and other crypto exchanges decided to retain their stablecoin offerings.

Source: http://www.cryptonewsz.com