Is the EU’s MiCA framework forcing investors to rethink their allegiance to Tether’s USDT and explore alternatives like Circle’s USDC and Ripple’s RLUSD?

USDT under radar

For years, Tether’s USDT (USDT) has been the go-to stablecoin for traders and investors. Yet, as we step into 2025, its dominance is starting to waver, particularly in the European Union, where mounting regulatory scrutiny and growing competition are challenging its unshakable reputation.

The turning point came on December 30, 2024, with the full implementation of the European Union’s Markets in Crypto-Assets regulations. 

Designed to bring order to the unpredictable crypto market, MiCA has imposed stringent 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 is grappling with a wave of redemptions, new regulatory hurdles, and intensifying competition from rivals like Circle’s USDC (USDC) and Ripple’s RLUSD (RLUSD). 

In the past, Tether’s CEO, Paolo Ardoino, raised concerns over the risks of “bank failures,” arguing that such requirements could expose stablecoin issuers to systemic vulnerabilities rather than reducing them.

But the market seems less concerned with Tether’s reasoning and more with its actions — or lack thereof. 

In the days leading up to MiCA’s implementation, nearly $4 billion worth of USDT was redeemed, marking the largest outflow since the 2022 crypto winter. 

Back then, scandals like the collapse of FTX and revelations of fraud across the industry sent shockwaves through crypto, shrinking USDT’s market cap from $83 billion in May to $65 billion by November — a 21% drop. 

The recent decline, while smaller, carries deeper implications. As of Jan. 9, Tether’s market cap stands at $137.5 billion, down from $141 billion just two weeks earlier.

The question now is not just whether Tether can adapt but whether the market will wait for it to do so. With USDC cementing 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 decode.

Competitors closing In: USDC and RLUSD’s strategic advances

Tether’s reluctance to comply with its strict reserve requirements has raised red flags among investors, while its competitors are thriving under the new framework. 

Even though EU member states have up to 18 months to fully enforce MiCA, the market isn’t waiting. Investors and exchanges are already repositioning, and USDT’s grip on the market appears to be slipping.

For context, exchanges like Coinbase and OKX have already delisted USDT for European users, citing non-compliance with MiCA. 

Circle’s USDC stands out as a prime beneficiary of the regulatory shift. Having secured MiCA approval in mid-2024, USDC has positioned itself as the stablecoin of choice for exchanges looking to align with EU rules. 

Binance’s partnership with Circle, aimed at accelerating USDC adoption globally, is a direct response to growing demand for transparency and compliance. This move has already begun to pay off; USDC’s market cap has grown by $2 billion since securing the license.

Meanwhile, Ripple’s RLUSD, launched on December 17, 2024, is also gaining traction as a regulatory-compliant alternative. 

Designed to operate seamlessly on the XRP Ledger (XRP) and Ethereum (ETH), RLUSD processed 33,953 transactions on the XRP Ledger and 1,690 on Ethereum during its testing phase alone. 

Ripple’s big Moment as RLUSD gains momentum in a changing era

The year 2025 could be a turning point for Ripple, as a convergence of legal victories, strategic partnerships, and a crypto-friendly administration in the U.S. creates ideal conditions for expanding its foothold in the stablecoin market. 

With Donald Trump’s presidency expected to usher in crypto-friendly policies, Ripple may finally resolve its long-standing legal battle with the Securities and Exchange Commission, lifting a major obstacle to its growth.

Already, Ripple has scored key wins in the SEC case, including reducing a potential $2 billion penalty to just $125 million. This resolution provides the company with the breathing room needed to refocus on innovation and the rollout of RLUSD. 

Monica Long, Ripple’s president, has hinted at ambitious plans for RLUSD, including imminent listings on major exchanges to broaden its reach and utility. 

“We are continuing to expand distribution and availability of Ripple dollars on other exchanges. So, I think you can expect to see more availability, more announcements coming soon,” Long shared in a recent Bloomberg interview.

Software company MicroStrategy is pushing forward with its Bitcoin buying spree in 2025, today snapping up more than $100 million worth of the orange coin.

An SEC filing and Monday announcement from the company’s co-founder and Bitcoin bull Michael Saylor showed that MicroStrategy spent $101 million buying 1,070 BTC at an average price of $94,004. That’s roughly half the amount of Bitcoin the company bought last week, consistent with the weekly buying trend that MicroStrategy started in November following the reelection of Donald Trump.

MicroStrategy now holds 447,470 Bitcoin in total. At today’s Bitcoin price of $101,832, that’s a stash worth over $45.5 billion. All told, the company bought their coins at an average price of $62,503, the announcement said.

Prediction markets last week were bullish that MicroStrategy would buy more Bitcoin today—and understandably so, given that that today’s purchase makes nine consecutively weekly buys for Saylor’s company.

On Myriad—a points-based prediction market and engagement platform developed by Dastan, parent company of an editorially independent Decrypt—users saw an 86% chance that MicroStrategy would hold at least 450,000 BTC before the end of this week. Those odds, though, have now tanked to just 20% as of this writing following the company’s announcement of a much smaller purchase relative to previous weeks.

On the Monday following Trump’s win, MicroStrategy announced it bought more than $2 billion worth of Bitcoin. It then followed up the next week with another $4.6 billion, and then again with its single largest purchase yet of $5.4 billion the week after that.

The company has continued buying more Bitcoin every week since, but the individual amounts have gradually decreased in recent weeks as the price of Bitcoin has swelled. Users on Polymarket, a prediction market co-founded by Shayne Coplan in 2020, currently see only a 2% chance that MicroSrategy holds more than 500,000 BTC by Trump’s inauguration on January 20.

MicroStrategy was previously a software company that sold data-analyzing solutions to companies. It still does that, but Saylor has since rebranded the firm as a Bitcoin development company, leading with its Bitcoin treasury.

It all started in 2020, when covid lockdowns and record low interest rates threatened to hurt the company’s shareholders, according to Saylor. He decided to buy Bitcoin and has since argued that the asset—being scarce—is the best way to preserve wealth.

Now, MicroStrategy makes most of its money by securitizing the biggest cryptocurrency by market cap: investors wanting exposure to Bitcoin can buy shares of the company that trade on the Nasdaq—an arguably safer, more regulated way of crypto investing.

It is now the biggest publicly traded holder of the cryptocurrency and issues debt to buy Bitcoin—making a killing for investors in the process: MicroStrategy stock is up over 500% year-to-date.

But concerns have been raised about how viable this is if the price of Bitcoin were to tank: the company is highly leveraged and some analysts now believe the stock price may be overvalued.

Edited by Stacy Elliott.