Market News

EU Crypto Regulation Update: MiCA's Impact on Liquidity and Tether's Struggles in Bloomberg Report

The European Union's new MiCA (Markets in Crypto-Assets) regulations are set to reshape the cryptocurrency market landscape significantly by the end of this year, primarily affecting stablecoins like Tether's USDT. Numerous EU crypto exchanges have preemptively delisted USDT to comply with these regulations, aiming to enhance oversight and curb illegal activities such as money laundering. Crypto experts are concerned that despite the intended goals, these regulations might undermine market liquidity and make the EU less appealing for digital-asset traders. MiCA stipulates that all stablecoins on central exchanges must be issued by entities possessing an e-money license, leading to a notable absence of license for USDT which may result in its removal by December 30. Although companies like Circle have secured this license, Tether's failure to do so could precipitate its delisting, affecting trading dynamics significantly as USDT possesses extensive global trading pairs. The potential decline in liquidity due to these changes is juxtaposed with optimistic indicators such as the doubling of crypto ownership in the Euro area since 2022; however, this growth is tempered with caution by the European Central Bank regarding survey methodology changes. As EU investments in crypto and venture capital reach a four-year low, the rapid regulatory adaptations and traders' shifts from USDT to other fiat or stablecoin pairs are critical developments in navigating this evolving regulatory landscape.