Crypto Market Crash Feared as Tether Avoids MiCA Compliance

The crypto market ended 2024 on uncertain ground, with concerns over Tether (USDT) and its compliance with Europe’s MiCA regulations dominating discussions. Speculation on social media suggested a potential market crash, but prominent crypto analyst Michaël van de Poppe believes these fears may be overstated.

Tether: Resilient or Risky?

Tether, often under scrutiny, has frequently been accused of being a “bubble” or using opaque financial practices. Yet, van de Poppe pointed to the company’s robust financial health, noting over $5 billion in net profits in the first half of 2024. Tether asserts it is fully backed and over-collateralized, though critics continue to question its transparency.

Why MiCA Could Be a Game-Changer

The Markets in Crypto Assets Regulation (MiCA) introduces strict guidelines for stablecoins in Europe, focusing on investor protection and financial stability. Tether has opted not to comply but has invested in Stably, a euro-pegged stablecoin issuer that meets MiCA standards. This strategic move allows Tether to bypass European regulatory hurdles while maintaining its presence in the U.S. and MENA regions.

In response to MiCA, many European exchanges have delisted USDT, favoring USDC or euro pairs. While Circle’s USDC has gained ground, some analysts argue that fears over USDT’s future are exaggerated. Temporary liquidity issues may arise, but a full-blown market crash is unlikely. Instead, this shift could create opportunities for investors to acquire altcoins at discounted prices.

Tether’s CEO Addresses Market Concerns

Paolo Ardoino, Tether’s CEO, urged supporters to disregard misinformation, calling competitors’ claims baseless. He highlighted Tether’s proactive steps, such as halting its EURT stablecoin to align with future regulations while investing in other EU operations.

Crypto lawyer Jonathan Galea clarified that non-compliance with MiCA does not make Tether illegal. However, strict enforcement could limit liquidity in European markets. Crucially, Tether’s primary focus remains on Asia, where most of its trading volume occurs, minimizing the impact of European regulations.

Van de Poppe’s Market Outlook

Van de Poppe sees the current market sentiment as an opportunity rather than a threat. He explains that Bitcoin’s recent correction and ETF outflows are typical year-end portfolio adjustments by asset managers. Renewed inflows are expected in January.

Meanwhile, Ethereum is displaying strength against Bitcoin, signaling upward momentum. Van de Poppe believes Ethereum is still undervalued, presenting a compelling case for investment.

Altcoins to Watch in 2025

Van de Poppe also highlighted altcoins like Optimism and SEI as promising picks for early 2025. He views XRP’s recent price dip as a natural retracement rather than a red flag.

He dismisses the bearish narrative around Tether as exaggerated, forecasting a market recovery in January. For long-term investors, this could be a prime moment to enter the market.

While concerns over Tether and MiCA compliance have created uncertainty, experts like van de Poppe believe the fears are overblown. For investors, this may be an ideal opportunity to prepare for potential gains in 2025.