Tether is once again providing support to the cryptocurrency market by injecting a total of 1 billion tokens in the past month. The new USDT tokens have been added to other stablecoins that support specific DeFi protocols.
The total supply of USDT has now expanded to 112.49 billion tokens, with their value backed by US T-bills. USDT is widely used, available on both centralized exchanges and emerging decentralized platforms. The token is growing in popularity on the Telegram network and can also be used to pay transaction fees. While Tether has launched various native versions on selected chains, USDT has also been bridged and held from the main Ethereum supply for other networks.
Transak has now announced support for USDT on TON. The current increase in USDT liquidity is slower compared to previous bull market periods. Despite previous bull markets helping Tether establish itself as a more reliable issuer, questions still linger about the extent to which USDT can be printed. Nevertheless, Tether has reported record earnings and strengthened its balance sheet during the recent months of the bull market.
Over time, USDT has reached the wallets of an estimated 50 million holders, making it one of the most widely distributed crypto tokens. Throughout Tether’s history, the company has faced criticism regarding its asset backing, and the current increase in supply is no different. People are closely monitoring the supply of USDT for signs of potential bubbles and risks associated with inflated token values.
There are concerns in the EU about potential regulatory hurdles for USDT and other stablecoins. The definition of “regulated stablecoins” under new Euro economic area regulations could limit the use of USDT. As an alternative, traders, stakers, or buyers may opt for USDC, a transparent, cash-backed stablecoin.
For users on Binance from the European Economic Area, USDT will only be available for selling. The Markets in Crypto Regulation (MiCA) framework is set to take effect from June 30, impacting the stablecoin market. Binance has announced plans to comply with the regulations by offering MiCA-compliant alternatives and regulated sources of liquidity.
The European Banking Authority (EBA) has yet to specify the standards for stablecoins, with a deadline set for June 30. The new regulations do not explicitly mention Tether’s USDT, categorizing stablecoins as “asset-referenced tokens.”
USDT and other assets may face challenges due to technical requirements for cash reserves, liquidity, and immediate availability. Issuers of asset-referenced tokens will need to have an office within the European Economic Area and inform regulators when creating new digital tokens. The oversight of the entire crypto sector is also set to increase.
EU authorities and banking regulators will produce an annual report on the issuers of tokens, e-money, or asset-referenced tokens. The EU aims to monitor EU-based users holding crypto assets issued by entities outside the EU. While EU regulations have primarily facilitated crypto trading rather than banning it, the new regulations are intended to provide legitimacy to crypto assets, particularly stablecoins. USDT may face delisting and removal of trading pairs if Tether’s reserve balance does not comply with the new EU regulations.
In the EU, an estimated 31 million users hold cryptocurrency, with ownership and usage levels lower compared to Asia. Coinbase is a leading platform for trading USDT on US-based exchanges, while Kraken is the only EU-based market at the top, facilitating 116 million in USDT trades. Kraken also serves as a crucial broker for converting to fiat currencies, and any freeze on USDT could disrupt this opportunity for European traders.
