Let’s clarify a bit the current situation with stablecoins under MiCA regulation, as there is a lot of misinformation circulating and people are spreading fear in the market for no reason

Tether (USDT) and USDC are currently not regulated in the EU, but are under regulation. The problem they face is that they are not USD-only based, as MiCA requires. Both also have securities or other assets backing 1 to 1 parity with the dollar. From talking to people directly connected with MiCA, USDC is closer to being licensed than USDT.

At this point, the major crypto exchanges (Binance, KuCoin, Coinbase, Kraken) have announced that they will not delist either USDT or USDC. Binance even announced that the spot parities will remain intact, and the only thing changing are the staking/earn/launchpool products and possibly futures. However, each country might have their own slightly different MiCA rules. Stable currency regulation comes into force on 30 June 2024.

What I think will happen next, according to discussions with several sources close to MiCA

USDT and USDC will be forced to get their internet money transmission license by the end of the year. In the meantime, more EU-regulated stablecoins will emerge and much of the trading will move to those parities. However, there will be an adjustment period where, as mentioned above, Binance and other exchanges will not delist USDT and USDC, but it is clear that they will have competition and, if they do not resolve the licensing issue, will be phased out of the European market. Why is this happening? The EU wants more visibility on transactions in stable currencies. If you don’t like EU policy, you can look for more crypto-friendly jurisdictions.

Impact for users and market

The impact for users will be minimal; at most, they will have to switch from an unregulated stablecoin to an EU regulated one. Impact for the market: In the short term, I think it will be bullish. A lot of liquidity will re-enter the altcoin market due to this FUD and force some players to sell USDT and USDC for altcoins, which could set the stage for a rally on altcoins by the end of the month. If you got this far, much love and put a heart to the post. If you want to add something, the comments section is yours.