Tether (USDT), one of the most popular stablecoins in the crypto space, is in grave danger. The European MiCA (Markets in Crypto Assets) regulation is making things difficult. These new rules could have a major impact on Tether’s operations in Europe. Paolo Ardoino, CEO of Tether and CTO of Bitfinex, explains that MiCA imposes strict limits on the volume and issuance of stablecoins. It also requires that 60% of stablecoin reserves be held in cash deposits with banks. The problem? These cash deposits are not insured above €100,000. This could lead to massive bank runs, causing instability for both stablecoins and traditional banks.
A symptom of failing national economies
In an interview with Cointelegraph, Ardoino shared his thoughts. He said that the success of USDT shows the failures in many national economies. Tether offers people an alternative when their economy is struggling. Take Japan for example. The stock market is crashing and the yen is unstable. Governments and central banks have printed too much money. This has led to economic instability. That is why more people are turning to crypto and stablecoins like USDT.
Tether’s Strategy and Compliance Efforts
Despite the difficult road ahead, Tether is not giving up. The company is actively in discussions with European regulators to amend these new regulations. Ardoino pointed out that Tether is not alone in facing these challenges; even their main competitors are concerned about the same issues. Ardoino hopes that through these discussions, they can work out a regulatory framework that is both safe and practical. In the meantime, they plan to expand their Tether team to 200 employees by the middle of next year. The main focus will be on strengthening the compliance team. This move reflects how serious they are about tackling issues related to illegal activities regarding their stablecoin.
Performance and future prospects
Even with all these challenges, Tether is making impressive progress. USDT recently reached a historic milestone by surpassing $115 billion in circulating supply. Last week, its market cap surged by over $1 billion. This happened at the same time that Bitcoin’s price skyrocketed to $62,000. According to Lookonchain, $1.3 billion worth of USDT was moved to major exchanges like Kraken, OKX, and Coinbase. This surge has helped USDT cement its position as the dominant player in the stablecoin market, now holding around 70% of the market share.
According to Tether’s transparency page, over 50% of its supply is on Tron. About 41% is on Ethereum. Tether also reported record profits of $5.2 billion in the first half of 2024. This is impressive, especially considering that Tether has a smaller labor force than other tech and crypto giants.
Tether is promoting blockchain education. It has entered into a partnership with the Africa Blockchain Institute. This collaboration aims to educate students from five universities in Ivory Coast on blockchain technology. This includes education related to cryptocurrencies, smart contracts, DeFi and industrial applications.
Conclusion: Taking on challenges and celebrating victories
The new MiCA regulation poses significant challenges for Tether and the stablecoin market. The strict reserve requirements rules could pose risks and cast some doubt on the future of USDT in Europe. But even with these obstacles, Tether has shown itself to be resilient and determined to persevere. The company’s performance speaks volumes about its resilience and drive for innovation. As the crypto space faces these changes, it’s important that both companies and regulators keep the conversation going. How Tether handles these regulatory issues is important for anyone investing in the crypto space.
Also Read: Gemini and Coinbase Clash with CFTC Over 2024 Presidential Gambling Ban!
