Tether’s Market Value Hits 2-Year Low Amid New MiCA Rules

Stablecoin leader Tether has seen its market value decline amid new European Union cryptocurrency rules.

The company’s USDT just had its sharpest weekly drop in two years, Coindesk reported Thursday (Jan. 2), leading to concerns about market volatility.

USDT’s market cap fell more than 1% to $137.24 billion this week, the largest decline since the crash of the FTX exchange in November 2022, the report said, citing data from TradingView. USDT had reached a record $140.72 billion in mid-December.

According to the report, the decline comes after several EU-based exchanges and Coinbase removed USDT due to compliance issues with the EU’s Markets in Crypto-Assets (MiCA) regulation that took full effect on Dec. 30 (the actual law kicked in six months ago).

The regulation says issuers must have a MiCA license for publicly offering or trading certain tokens within the EU. Traders based in the bloc can still hold USDT in non-custodial wallets, but can’t trade it on MiCA-compliant centralized exchanges.

CoinDesk notes that USDT is a “gateway” to the crypto market, so the delistings and market value decline have led to social media speculation of a broader crypto market drop.

These worries, however, could be unfounded and the negative impact could be confined to the EU, Karen Tang, head of APAC partnerships at Orderly Network, a permissionless Web3 liquidity layer, wrote in a post on X.

Tether’s restrictions in the EU “due to MiCa regulation isn’t going to harm USDT dominance,” Tang wrote. “EU isn’t the largest crypto market. Most crypto trading volume occurs in Asia and U.S. All this will do is stunt the EU’s digital assets innovation, which is already slow due to convoluted overregulation. If I could short the EU, I would …”

As PYMNTS wrote last month, Tether has responded to MiCA by pivoting its European strategy toward its Hadron platform, which will support MiCA-compliant stablecoins from other entities.

“As regulatory frameworks solidify in major jurisdictions, the moves of issuers like Tether are highlighting an emerging potential divide within the sector — one that could reshape the stablecoin landscape into two distinct tiers,” that report said.

“Stablecoins such as Tether’s USDT, while widely used, have faced persistent questions about transparency and regulatory compliance. By focusing on platforms like Hadron, Tether may be positioning itself to serve a different market — one less reliant on stringent oversight and more aligned with the ethos of decentralized finance.”