Will the EU's MiCA framework force investors to rethink their loyalty to Tether's USDT and explore alternatives like Circle's USDC and Ripple's RLUSD?
USDT is under the radar
For many years, Tether (USDT) has been the go-to stablecoin for traders and investors. However, as we enter 2025, its dominance is beginning to decline, especially in the European Union, where increased regulatory scrutiny and growing competition pose a challenge to its unwavering reputation.
The turning point came on December 30, 2024, completely application EU markets in crypto assets regulations.
Designed to bring order to the unpredictable cryptocurrency market, MiCA has imposed strict compliance requirements on stablecoin issuers, including a mandate for major players like Tether to hold 60% of their reserves in EU banks.
As these regulations take effect, Tether faces a wave of redemptions, new regulatory hurdles, and intensified competition from rivals like Circle's USDC (US dollars) and Ripple's RLUSD (RLUSD).
In the past, Tether CEO Paolo Ardoino has raised concerns about the risk of “bank failures,” arguing that such requirements could expose stablecoin issuers to systemic vulnerabilities rather than reduce them.
But the market seems less interested in Tether's logic and more interested in its actions — or lack thereof.
In the days leading up to MiCA implementation, nearly $4 billion in USDT was redeemed, representing the largest outflow since the crypto winter of 2022.
At that time, scandals such as collapse FTX The industry fraud revelations sent shockwaves through cryptocurrencies, shrinking USDT's market capitalization from $83 billion in May to $65 billion by November — a 21% decline.
Although the recent decline was smaller in size, it has deeper implications. As of January 9, Tether's market cap was $137.5 billion, down from $141 billion just two weeks ago.
The question now is not only whether Tether can adapt, but whether the market will wait for it to do so. With USDC strengthening its regulatory foothold and RLUSD rapidly gaining momentum, could this be the beginning of a sharp decline for the world's largest stablecoin? Let's try to decrypt.
Rivals are closing in: The strategic progress of USDC and RLUSD
Tether's reluctance to comply with strict reserve requirements has raised red flags among investors, while its competitors are thriving under the new framework.
Although EU member states have up to 18 months to fully implement MiCA, the market is not waiting. Investors and exchanges are already repositioning, and USDT's grip on the market appears to be slipping.
For context, exchanges He loves Coinbase and OKX have already done this It has been deleted USDT for European users, due to non-compliance with MiCA.
Circle's USDC stands out as a major beneficiary of the regulatory shift. After receiving MiCA approval in mid-2024, USDC has positioned itself as the stablecoin of choice for exchanges looking to align with EU rules.
Binance partnership With Circle, which aims to accelerate USDC adoption globally, is a direct response to the growing demand for transparency and compliance. This step has already begun to bear fruit; USDC's market capitalization has increased by $2 billion since obtaining the license.
Meanwhile, Ripple's RLUSD, which launched on December 17, 2024, is also gaining traction as a regulatory-compliant alternative.
Designed to work seamlessly on the XRP Ledger (XRP) and Ethereum (Ethereum), RLUSD processed 33,953 transactions on XRP Ledger and 1,690 on Ethereum during the testing phase alone.
Ripple's big moment as RLUSD gains momentum in a changing era
2025 could be a turning point for Ripple, as the convergence of legal victories, strategic partnerships and crypto-friendly governance in the US creates ideal conditions to expand its foothold in the stablecoin market.
With the presidency of Donald Trump expected To usher in cryptocurrency-friendly policies, Ripple may finally resolve its long-running legal battle with the Securities and Exchange Commission, removing a major hurdle to its growth.
Ripple has already won major victories in the SEC case, including reducing the potential $2 billion penalty to just $125 million. This decision provides the company with the breathing room needed to refocus on innovation and deployment of RLUSD.
Ripple CEO Monica Long has hinted at ambitious plans for RLUSD, including an imminent listing on major exchanges to expand its reach and utility.
“We are continuing to expand the distribution and availability of Ripple on other exchanges. So, I think you can expect to see more availability and more announcements soon.
Ripple's well-established payments business is also a critical driver of RLUSD adoption. Over the past year, Ripple's payment solutions have doubled their transaction volume, reflecting their value in facilitating seamless cross-border transactions.
Stablecoins like RLUSD can enhance this ecosystem by offering businesses an effective alternative to traditional banking systems.
As Ripple expands the availability of RLUSD, businesses that already rely on its payment solutions will likely adopt the stablecoin, further accelerating their growth.
Beyond payments, partnership With Chainlink, the leading blockchain oracle, it could push it into the field of decentralized finance.
Chainlink's infrastructure, which has supported more than $18 trillion in transaction value, positions RLUSD to effectively integrate with DeFi ecosystems, creating new opportunities for both traditional and DeFi users.
The stablecoin market, now worth $206.2 billion, is still dominated by USDT, which has a 66% market share.
What to expect next?
USDT's struggles have been years in the making, marked by its unparalleled dominance but clouded by persistent questions about transparency.
While Tether has consistently maintained its peg to the US dollar, its reluctance to provide widespread audits and persistent accusations of inadequate safeguards have fueled mistrust.
Amid this, USDC has positioned itself as a “secure” alternative, building its reputation on monthly certifications and a compliance-first approach. Its recent approval under European MiCA regulations has strengthened its foothold in the region.
Meanwhile, Ripple's RLUSD, though a newcomer, is also gaining traction thanks to Ripple's robust payment infrastructure, fast exchange listings, and seamless integration into DeFi markets.
With MICA setting a clear regulatory standard in the EU, the US will soon follow suit. Signs from the Trump administration point to an acceleration of cryptocurrency-friendly policies, which will likely push the United States toward a responsible regulatory framework.
With these shifts, 2025 may mark the beginning of a power shift in the stablecoin market. While USDT is still the leader, for now, the momentum of its competitors suggests that change is coming.
Disclosure: This article does not constitute investment advice. The content and materials contained on this page are for educational purposes only.
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