- The new MiCA regulations demand stablecoin issuers obtain specific licenses to issue fiat-pegged digital currencies
- Tether has yet to obtain the necessary e-money license and must comply with reserve and transparency requirements
- USDT slightly lost its dollar peg following reports of potential delistings as MiCA regulations take effect
The new MiCA regulations demand stablecoin issuers obtain specific licenses in order to issue fiat-pegged digital currencies. The new regulatory framework pushed forward by the European Union started today, December 30, and is already showing its effect in the market.
One of the biggest talking points regarding the new framework “Market in Crypto-Assets” —or MiCA for short—is about the world’s leading stablecoin firm Tether being deemed not MiCA compliant.
As of today, Tether has yet to obtain the necessary ‘e-money license’ to be deemed compliant by the European Union.
This specific license allows firms to issue electronic money in the region. To obtain this license, however, firms must be approved of specific terms including compliance with anti-money laundering laws. They must also prove that its reserves are liquid, and provide transparent whitepapers.
The “reserve” aspect of the new ruleset has also proven an issue for the world’s largest stablecoin issuer. MiCA states that in order to be approved, stablecoins must maintain 83% of its reserves in independent banks.
Most of Tether’s reserves are bound to U.S. government bonds, Bitcoin, Repo agreements, money market funds, and cash and bank deposits. However, Tether has seen its share of scrutiny when it comes to assessing its reserves, including the WSJ claiming the company was under investigation by the Department of Justice in October of this year.
Tether (Slightly) Loses Dollar Peg
Following reports of new potential delistings as the MiCA set date to start arrived, USDT had an uncharacteristically bad trading day on December 30. The digital currency known for its 1:1 ratio to the U.S. Dollar has slightly lost its peg, reaching the lowest bearish streak in the year.
According to CoinMarketCap, USDT is currently valued at $0.9979 but reached as low as $0.9974 throughout the day. Its market capitalization took a $2 billion dollar hit over the past 10 days, going from $140 billion to today’s $138B—the largest decrease in a bullish year ever for Tether.
