While the Trump administration was eager to make the United States of America the reference point China saw this as an opportunity to take another route with the Tether Ban.
As the largest US dollar pegged stablecoin Tether has been perceived as a backbone of crypto transactions. Still worries raise alarm bells as it still has the risk of being the root cause of a huge market collapse.
Will The Ban On Tether Collapse The Crypto Market?
The final decision by tether whether to operate within European Markets in Crypto-Assets (MiCA) regulations puts the stablecoin in a trouble state.
MiCA puts forth that in order to be enlisted in the crypto world, stablecoins should carry an e-money license with them.
Due to the deadline lapse tether was able to meet, it was slated to be banned in Europe and remain delisted from multiple exchanges by the 30, 2024 deadline.
This development may have negative correlates in the crypto market. Whether because of a liquidity issue or something else, Tether delisting seems very likely since it is the third largest cryptocurrency after bitcoin and ethereum with a total market cap of $139.28 billion.
Considering this, the ban in existent would inhibit trading volumes of trading, USDT pair trades liquidity, and increase USA interbank charges.
These conditions could lead to a deficiency in liquidity, which will discourage the market rather than help it as it is more likely to lead to the collapse of the market.
These such bans face challenges in the form of shifting market share of tether which has been steadily growing since March in spite of the doomsday scenario predicted for the currency.
Strangely, this decrease in the dominance of Tether could aid Bitcoin as the two currencies are often positively correlated.
On top of the regulatory issues, Jason identified concerns regarding Tether’s presence in the market, noting that no new tokens were issued in more than a fortnight.
Citing the fact that he referred to Tether is both the ‘glue’ of the cryptocurrency and a “ticking time bomb”, Jason illustrated the danger which lay in the former’s collapse.
Conflicting accusations have emerged as Tether continues to draw a lot of controversy.
For the international trade experts, it is a cause for concern, however being one of the nation’s largest, it lends Tether some credibility.
On paper, Tether is a household name with a staggering $118 billion in circulation according to Bons Justin, one of Tether’s critiques.
Other critiques include Jason Calcanis who cited lack of reporting and funding. However, Tether’s CEO dismissed all these concerns labeling them as “fear, uncertainty and doubt,” or FUD for short.
What is the impact of the Tether Ban on the Crypto Investors?
It is expected that European investors will lose the most out of this as Tether would be banned throughout Europe, so they would lose access to the largest liquidity provider in the European territory.
This ban would also create a massive loss in liquidity throughout other markets creating chaos on a larger scale.
To compound this, it is come to my attention that there are many concerning questions that pundits have over the long term reliability of Tether.
But it seems like Tether doesn’t really care as many top officials are viewing it as a positive for Tether in the long term.
That was a relatively difficult task because the order of those statements needs to be maintained and intact to prevent any further violations but overall it was a monumental task across the spectrum.
