Cryptocurrency horoscopes predict a bull market, but seismic events occurring in the cryptocurrency industry could cause a cycle meltdown. USDT, the largest stablecoin, could come under regulatory scrutiny in the European Economic Area (EEA) due to new MiCA regulations, threatening its market dominance and potentially banning it from the EU There is.
Coinbase plans to delist USDT in the European Economic Area (EEA)
Recently, Coinbase, a leading cryptocurrency exchange, announced that all unlicensed stablecoins that are not compliant with the European Union’s Cryptocurrency Market Regulation (MiCA) will be removed from the European Economic Area (EEA), which consists of 30 countries. ) announced that it would be delisted from the platform. , including USDT by the end of the year.
“In light of our compliance efforts, we plan to restrict the provision of services to EEA users related to stablecoins that do not meet MiCA requirements by December 30, 2024,” Coinbase said in a statement.
While other stablecoin issuers such as USD Coin (USDC) and Euro Coin (EURC) obtained electronic money institution licenses in July 2024, Tether Limited Inc. has not yet obtained the USDT license. and may be banned by the EEA.
What is the MiCA Regulation?
The Market in Cryptoassets (MiCA) Regulation is a new European Union (EU) law designed to bring clarity, security, transparency and protection to the growing world of cryptoassets. Full implementation is expected by December 2024.
The MiCA Regulation was approved by the EU Parliament in April 2023 with the aim of protecting investors. Through these regulations, the authorities aim to ensure the financial stability of the crypto sector.
While stablecoins have become an important element in the world of DeFi, bridging the gap between traditional finance and decentralized finance (DeFi), MiCA has also introduced specific guidelines regarding stablecoins.
According to MiCA, cryptoassets fall into three categories: asset reference tokens (ARTs), electronic money tokens (EMTs), and other cryptoassets, including Bitcoin and utility tokens. Stablecoins fall into the ART and EMT categories.
While EMT is tied to a single fiat currency such as the euro or dollar, ART is backed by a combination of assets such as multiple currencies and commodities. This classification ensures clear oversight and clear regulatory treatment depending on the type of stablecoin.
Additionally, stablecoin issuers must have transparent governance structures and effective risk management practices. These measures are aimed at increasing the reliability and credibility of stablecoins in the market.
Under the new MiCA regulation, stablecoin issuers will require authorization from a national competent authority within the EU. Issuers are also required to maintain sufficient capital reserves to back their tokens to ensure stability of value.
Apart from these regulations, MiCA also establishes requirements for security auditors. This ensures that the auditor is a qualified cybersecurity professional who regularly audits and reports on the compliance of crypto asset providers.
List of stablecoins that can replace USDT
Currently, USDT holds the title of largest stablecoin, followed by Circle, the issuer of USD Coin (USDC) and Euro Coin (EURC).
At the time of writing, USDT’s cumulative market capitalization is over $119.64 billion, while USDC, the second largest stablecoin, has a market cap of approximately $35.51 billion. USDT is more than three times the size of its competitors, demonstrating its strong position in the crypto market.
The reason behind USDT’s immense popularity is its ease of access to major cryptocurrency exchanges such as Binance and Coinbase. USDT is a highly liquid asset pegged to the USD at a 1:1 ratio, allowing users to trade with widely popular payment services such as PayPal. Additionally, USDT is currently available on most blockchains including Bitcoin, Solana, Tether, and Ethereum.
With this in mind, it will be a tough challenge for stablecoin competitors to replace USDT anytime soon. While delisting from major crypto exchanges like Coinbase, which holds 0.26% of trading volume, may not have a major impact, it could pave the way for other stablecoins to expand their presence in the market. It will be.
final thoughts
Globally, MiCA is expected to set new standards in the regulation of crypto assets. This will also influence other countries, such as the United States, to prepare regulatory frameworks for regulating cryptocurrencies. MiCA aims to make the cryptocurrency market safer and more attractive to investors by ensuring transparency, stability, and consumer protection.
Also read: Tether discontinues USDT on Eos and Algorand for efficiency
