Just as crypto convert Donald Trump prepares to assume office in the US, the European Union’s cryptoasset regulations, which are expected to go into full effect at year’s end, are already changing the market for a significant kind of digital token and might make the bloc less appealing to investors.
The leading stablecoin, USDT from Tether Holdings Ltd., has already been delisted by a number of EU-based cryptocurrency exchanges in order to adhere to the Markets in Cryptoassets regulation. Investors are defaulting to using the euro to trade in and out of cryptocurrencies, and new issuers are trying to fill the hole in the market for such assets.
In order to help authorities better understand cryptocurrency flows and prevent crimes like money laundering, which blockchain forensics specialists have stated USDT is commonly used for, the new EU regulations were created. However, cryptocurrency entrepreneurs warn that MiCA would wind up depleting market liquidity without accomplishing the EU’s objectives, harming the bloc’s appeal to traders of digital assets at a crucial juncture.
Usually, stablecoins are linked to a currency, such as the euro or the dollar. They are therefore an essential tool for cryptocurrency traders to switch positions or shift money across platforms. Additionally, they are now more helpful for businesses wishing to transfer funds internationally, enable quicker and less expensive digital payments, and assist investors want to use blockchain technology to trade and settle conventional assets like bonds.
Growing worries that stablecoins are being used for illegal activities have coincided with that increase. Police in the UK said earlier this month that they had shut down Russian networks that were transferring billions of pounds for espionage, street gangs, and oligarchs. According to the National Crime Agency, the networks used USDT.
At the time, Tether declared that it “is fully committed to combating illicit activity and unequivocally condemns the illegal use of stablecoins.”