- MiCA introduces strict regulations for stablecoins, focusing on transparency and liquidity
- Coinbase may remove non-compliant stablecoins like USDT to adhere to MiCA’s new guidelines
- USDT plays a crucial role in the crypto economy as a stable liquidity pool and bridge between digital assets and fiat
Because MiCA is a new European regulation on crypto-assets, thereby pushing cryptocurrency exchanges into a rush to be able to comply with the standards set by the new law, from June 2024, MiCA lays down strict rules on stablecoins whose value remains stable and are often pegged to assets such as the US dollar.
This class of stablecoin will equally be tied to strict rules concerning liquidity and transparency.
Bloomberg states that Coinbase might delist all non-compliant stablecoins, including USDT from Tether-a well-known criticized large market capitalization stablecoin for perceived non-transparency.
Why does Tether matter?
Over the last couple of years, USDT has managed to establish itself as the leading stablecoin and is listed on virtually all major trading platforms. Above all, it gives traders the opportunity to move swiftly from volatile cryptocurrencies into a stable asset without having to use traditional fiat currencies.
Besides, Tether also acts as a crucial liquidity pool for the entire cryptocurrency ecosystem. It allows market participants to hedge against potential price fluctuations; it is also used as a bridge among other cryptocurrencies and fiat.
With its vast adoption across key trading platforms, Tether acts indispensably for many in the market because of the great role it’s been playing in DeFi.
It is also one of the most profitable companies in the world, with a net profit reported in Q4 2023 of about $6.2 billion. That was impressive then when they had about 50 employees-which has kept steadily increasing to nearly 200 employees.
The total assets under management, according to Blocktrainer, are around $100 billion. Though in the early years of its operation, a lot of transparency issues marred Tether, independent auditors have since shown that the company can actually cover its stablecoin.
Conclusion
Finally, with the coming of MiCA, Coinbase would most likely remove USDT as a coin simply because of the new regulations’ requirements.
While USDT has had some past transparency concerns, it remains one of the largest stablecoins given its usage and critical position in the crypto economy between other cryptocurrencies and fiat currencies.
