Tether USDT market capitalization drops by $1.4 billion as MICA activates  

On-chain data revealed that Tether’s USDT lost approximately 1.2% of its market capitalization this week as the European Union’s digital asset regulations fully took effect on December 30.

The stablecoins market cap dropped to $137 billion, down from its December peak of $140 billion, sparking speculation about USDT’s future and potential volatility. Concerns emerged over whether Tether’s operator might exit the European Union due to the newly implemented laws.

Social media speculation was met with pushback from industry leaders and analysts who highlighted USDT’s resilience outside the EU.

Bitblaze noted that approximately 80% of USDT’s trading volume occurs in Asia and the MICA deadline does not mean Europeans can’t hold USDT.

“There’s a lot of misinformation spreading about USDT being deemed illegal in the EU, so let’s clear that up first First of all, it will not be illegal to hold USDT in the EU  

You can keep USDT in non-custodial wallets and even use it for trading on DEXs the restriction is that you cannot use USDT for trading on MiCA-compliant exchanges” Bitblaze stated

“USDT is the largest stablecoin, with a market cap of $138.5B and a daily trading volume of $44B As of today, 80% of USDT’s trading volume comes from Asia, so the EU delisting won’t have any severe impact”, Bitblaze added

Tang argued that MiCA regulations could hinder the EU itself, slowing digital asset innovation due to “overly complex regulations.” 

Speculation about USDT’s future in the EU gained momentum in late 2024 after Coinbase and several EU-based exchanges delisted USDT, citing MiCA compliance issues. While some stablecoin rules took effect in July, the full MiCA framework was implemented at the end of the year.

MiCA mandates stablecoin issuers to secure specific licenses for e-money tokens and asset-referenced tokens like USDT. Currently, Circle’s USDC remains the only major stablecoin issuer to obtain a MiCA license.