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With comprehensive MiCA (Markets for Crypto Assets) regulations coming into effect in Europe this year, it is believed that these regulations will not allow Tether to operate in the region. What does this mean for Europe and the cryptocurrency world?
Tether is the largest stable coin USD in the world and in the first quarter of this year it made a record profit of $4.52 billion. However, Tether's market share has been gradually declining and currently stands at around 69%. In contrast, USDC Circle, a regulated alternative to USDT, has increased its market share to 11%.
The main reasons why Tether is not compliant with European regulations stem from its non-compliance with the transparency and oversight obligations imposed by MiCA regulations. The MiCA requires stablecoin issuers to maintain adequate reserves and report them regularly. Tether has a history of transparency problems with respect to reserve assets, which may make it difficult to meet these requirements. In addition, the MiCA places restrictions on the volume of stablecoin transactions, which can create systemic risk. Due to the large volume of transactions, USDT may be subject to stricter controls. While Tether has yet to make an official statement, there are numerous reports that the company is considering alternatives in response to regulations in Europe.
All of these developments come as some major cryptocurrency exchanges begin to restrict USDT trading pairs before MiCA regulations take full effect. For example, the OKX exchange has introduced restrictions on USDT trading pairs, and other major exchanges, such as Kraken, are also considering a similar decision. One of the biggest news regarding trading pairs with USDT was the recent announcement by the Coinbase exchange. Coinbase is preparing to delist stablecoins that are not MiCA-compliant, such as USDT, around December.
The likelihood that a major stablecoin like Tether will no longer compete in Europe is raising hopes that euro-based stablecoins will increase in popularity. Since the euro is Europe's local currency, it is believed that this development could make euro-based stablecoins more likely to be chosen.
In this context, Circle, following the success of its US dollar-based stablecoin (USDC), has launched a new stablecoin in euros, EURC. Circle EURC aims to fill an important gap in the market as a regulated stablecoin in euros. Given the potential for large USD stablecoins such as Tether to withdraw from the European market due to MiCA regulations, EURC can be expected to play an important role in Europe.
While these developments are taking place, it is important to remember that USD stablecoins always dominate the world, and other currencies do not show much presence in this area. If the market moves in this direction, stablecoins such as EURC could gain in popularity. However, if these regulatory changes isolate Europe, leading it in a completely different direction globally, the continent could find itself left behind in the cryptocurrency world.
Looking at the banking sector and financial institutions in Europe, there is strong opposition to cryptocurrencies in traditional financial systems. The president of the European Central Bank, Christine Lagarde, has clearly stated that cryptocurrencies "have no value." With this perspective and influence on regulatory policies, Lagarde may be hoping that cryptocurrencies will either be eliminated completely in Europe, or at least severely curtailed.
Despite this 2022 statement, cryptocurrencies continue to develop and grow rapidly. This situation poses a potential threat to the authority of traditional financial institutions and central banks. One of the key features of cryptocurrencies is decentralization, which aims to reduce the role of intermediary institutions in the financial system and distribute power to individuals. This state of affairs can be difficult for the European banking sector, which is accustomed to central authority, and could be a significant factor in their negative attitude toward cryptocurrencies. USDT has correctly served as a stable asset in the cryptocurrency world for many years. As you can see, thanks to the MiCA regulations, USDT, which has been used as an alternative stablecoin for years, will become an asset that does not comply with European regulations after the regulations are introduced, and for this reason will not be allowed to be offered as a stablecoin by cryptocurrency exchanges.
Lagarde supports the introduction of a central bank digital currency(CBDC) in the eurozone. However, she seems to view competition from cryptocurrencies such as Bitcoin as an undesirable situation.
In addition, as the European Central Bank continues to cut interest rates, the question arises as to what the value of the euro will be. In order for the debt in the eurozone to be serviced, it will be necessary to significantly increase money issuance, which will lead to a decline in the value of the currency of European citizens. Lagarde may think that the CBDC will accelerate this process and prevent citizens from being diverted to safe havens such as gold, silver or Bitcoin. It appears that states and central banks, which are losing their ability to tightly control money with each new regulation, are seeking to remove cryptocurrencies from the market, under the pretext of "protecting citizens," even though these assets have existed for years and have served their purpose.
Under MiCA regulations, many exchanges choose to remove USDT trading pairs, but as a Bitcoin ATM we take a protective stance towards our users and closely monitor the market. Bitcoin ATM continues to allow its users to trade both USDT and USDC stablecoins.
Particularly in recent times, as a result of these USDT-related developments, we continue to enable users who prefer the USDC USDC purchase and exchange them for cash.
In addition, with amazing capabilities, we offer the possibility to exchange USDT i USDC into cash via ATMs Bitcoin ATM with zero commission and even additional rates of +1% to +3%.
You can visit our nearest ATMs, to purchase USDC or USDT or exchange your stablecoins for cash.
