Tether FUD Envelops the Cryptocurrency Market: What Would Be the Consequences if it Gets Delisted? - Coin Bulletin

The MiCA cryptocurrency law, which will come into effect as of January 1st, puts Tether face to face with the delisting FUD.

Despite being the world's largest stablecoin, considered ideal for crypto transactions and indexed to the value of the dollar, Tether faces the threat of being delisted in Europe due to non-compliance with MiCA (Markets in Crypto-Assets) regulations.

While the European Union under MiCA requires stablecoins operating in the region to keep at least 60% of their total dollar reserves in EU-linked banks, Tether opposed this. On the other hand, USDC accepted this condition and became compliant with MiCA, joining the list of compatible stablecoins.

The critical role of Tether in the market highlighted the potential liquidity problems that could arise from the delisting of USDT in the crypto market. Tether ranks third in market capitalization after Bitcoin and Ethereum, with a total market value of 139.28 billion dollars.

Liquidity Issues and Potential Collapse

The delisting of Tether, especially at a time when investor sentiments are moving away from greed, could lead to serious liquidity problems for the market, triggering crypto collapse-like situations.

This development could adversely affect transactions in USDT pairs, crypto trading fees, and overall trading volume. A decrease in Tether's market dominance could support a Bitcoin price rally, as there is a negative correlation between Bitcoin and Tether.

Some experts suggest that European investors can create an upward wave by converting some of their Tether assets to USDC and some to Bitcoin, Ethereum, and altcoins.

What Does It Mean for Crypto Investors?

The impact of the Tether ban on European investors will be significant. These investors will be deprived of the features of the largest stablecoin in the market. In addition, cryptocurrency exchanges will also be negatively affected by this situation and may encounter liquidity issues.

Tether's lack of oversight and major criticisms could undermine investor confidence in this stablecoin. However, Tether CEO Adornio stated that he interprets all of these negative comments as a "bull signal" for the token.