- Europe’s impending ban on Tether (USDT) due to regulatory non-compliance threatens to disrupt global crypto markets heightening fears of a market crash.
- Despite criticism over transparency and auditing, Tether’s CEO remains optimistic, dismissing concerns as baseless FUD while the crypto world braces for potential turmoil.
As the United States hints at embracing cryptocurrencies under Donald Trump’s leadership, Europe is taking a starkly different approach with its impending USDT ban. Tether, the largest stablecoin with a $139.28 billion market cap, plays a critical role in the crypto ecosystem due to its dollar peg, which ensures stability in transactions. However, this same stablecoin is now at the heart of concerns that it could trigger a significant market crash.
Europe’s Tether Ban and Its Ripple Effects
The European Union’s Markets in Crypto-Assets (MiCA) regulation requires stablecoins like Tether to obtain an e-money license to trade on crypto exchanges. With Tether failing to meet the compliance deadline, the stablecoin faces delisting across European exchanges starting December 30, 2024.
The delisting of USDT could unleash a series of negative effects on the crypto market. As the third-largest cryptocurrency after Bitcoin and Ethereum, Tether serves as the backbone of countless trading pairs, crypto transactions, and exchange liquidity. Its removal from European markets may cause liquidity shortages, disrupt USDT pair trades, and increase transaction fees, creating a cascading effect across the global market.
Tether hasn’t minted anything in over two weeks, and nobody knows why. This has been sending shockwaves through the crypto markets.
Tomorrow, Tether will be officially banned in Europe for refusing to comply with regulatory requirements.
As a result, hundreds of exchanges will…
— Jacob King (@JacobKinge) December 26, 2024
Investor sentiment, already showing signs of caution, could worsen further, leading to a market downturn. Analysts have pointed out that Tether’s diminishing dominance could pave the way for Bitcoin to rally, given their negative correlation, but not without significant turbulence first.
The concerns surrounding the stablecoin extend beyond regulatory scrutiny. Financial analyst Jason has raised alarms over Tether’s recent inactivity, noting that the stablecoin has not minted any new tokens for over two weeks. Describing Tether as the “glue” of the crypto market, he also warned that it is a “ticking bomb” poised to detonate with its delistings and bans.
Tether is wild 🍿
Do I have this right: they’re making billions while being banned in multiple jurisdictions, and they’re the standard now for the darkest of transactions?
And they still haven’t passed an audit by a major firm — while having tens of billions under their… https://t.co/J45SNI1MrW
— @jason (@Jason) December 27, 2024
Critics like Justin Bons have called Tether a “$118 billion scam,” while prominent venture capitalist Jason Calacanis labeled it the standard for opaque transactions, questioning its lack of audits and transparency. Despite these allegations, Tether continues to dominate the market even in jurisdictions where it is banned.
Tether CEO’s Defiant Stance
Paolo Ardoino, Tether’s CEO, remains unfazed by the growing criticism. In a recent post, he dismissed the concerns as unfounded fear, uncertainty, and doubt (FUD), labeling them a bullish signal for Tether. Ardoino’s defiance reflects the stablecoin’s resilience in the face of repeated skepticism.
For European investors, the ban means losing access to the stability and liquidity Tether provides. Crypto exchanges in Europe could face operational challenges, potentially leading to liquidity crises. Globally, the delisting of USDT from major exchanges may create shockwaves, heightening fears of a broader crypto market crash.
