Tether Supply Drops Amid Regulatory Changes

The USDT supply drop has sent shockwaves through the crypto market, with some experts predicting that this may be the beginning of a longer-term shift in stablecoin dominance.

According to recent data from blockchain intelligence firm Solid Intel, the circulating supply of Tether (USDT) has contracted by approximately 1.7% over the past month, marking the largest monthly reduction since the catastrophic collapse of the FTX exchange in November 2022.

This decline is attributed to a combination of factors, including the implementation of EU's MiCA regulation and a cyclical downturn in cryptocurrency prices.

The European Union's Markets in Crypto-Assets (MiCA) regulation represents a foundational shift for the industry, establishing a comprehensive framework for crypto-asset service providers across the EU's 27 member states.

For stablecoin issuers like Tether, the rules impose strict requirements on reserves, governance, and transparency. Specifically, the regulation mandates full reserve backing, rigorous reporting, and licensing requirements.