Tether (USDT) Turns 10, Working on MiCA-Compliant Solution by November
Oct 07, 2024 pm 07:00 PMYesterday, USDT, Tether's stablecoin, turned 10 years old. Today marks 10 years of USDt! To celebrate, we're launching our documentary
Stablecoin issuer Tether is planning to roll out a new technological solution by the end of the year to ensure that its flagship stablecoin, USDT, continues to be available in the European market.
The European Union's Markets in Crypto Assets (MiCA) legislation went into effect on June 30, introducing a regulatory framework for digital asset service providers and issuers in the EU.
The rules governing stablecoins stipulate that fiat-collateralized stablecoins can only be issued by entities recognized as authorized e-money issuers.
As of now, Tether is not recognized by the EU as an e-money issuer.
According to Tether's Chief Technology Officer (CTO) Paolo Ardoino, the company is working on a solution that could be ready by November, over a month ahead of the December 30 deadline.
If USDT does not comply with MiCA by that date, it could be delisted from exchanges for users in EU countries.
While it is unlikely that exchanges will voluntarily remove the possibility of legally trading USDT for European citizens, the option theoretically remains open.
Hence, Tether is seeking a solution that will allow USDT to remain available on exchanges for EU residents.
Ardoino confirmed that the solution must be completed by December 30, though it may be ready as early as November.
However, the nature of this solution is still unclear. Ardoino only stated that the details will be announced at a later date. It is expected to be a new tech solution designed specifically for the European market to adapt USDT to the new regulatory landscape.
Tether has noted that certain aspects of MiCA make it more challenging to operate licensed stablecoins in the EU, potentially introducing new risks to the local banking infrastructure and the stablecoins themselves.
One concern raised by Tether is that the new regulation could expose banks and digital assets to systemic risks, rendering them susceptible to issues like mass withdrawals, such as those encountered by Silicon Valley Bank last year.
The company did commend the EU regulator for finally establishing a clear and structured regulatory environment, highlighting that the use cases for stablecoins differ greatly in Europe compared to emerging and developing markets where USDT is more widely adopted.
On October 6, 2014, the stablecoin USDT was officially launched. At the time, Ethereum did not yet exist, with its blockchain being created the following year.
Initially, the USDT token was launched on a Bitcoin sidechain called Omni. Out of the 119 billion USDT in circulation today, nearly 900 million are still present on the old Omni.
When USDT was first launched, less than 300,000 tokens were minted on Omni. This number rose to over 500,000 in 2015 and crossed one million in 2016.
The first major boom in USDT usage occurred during the crypto market rally in 2017, which propelled the stablecoin's market capitalization to over a billion dollars, marking an x1000 increase in less than two years.
It is worth noting that the price of USDT has remained around $1 throughout this period, indicating that only the usage of the stablecoin increased significantly, not its value.
The following year, USDT crossed the 2.5 billion mark but later fell below 2 billion during the bear market.
The second major boom in USDT usage began in 2019, when the stablecoin crossed the 4 billion mark and continued into 2022, reaching over 80 billion.
During the bear market of 2022, USDT's market capitalization briefly dropped below 70 billion. However, it recovered in 2023, crossing first 90 billion, then 100 billion in 2024, and currently stands at around 120 billion dollars.
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