USDT (Tether) was developed in 2014 as the world’s first stablecoin and continues to play an important role in the cryptocurrency market. However, despite its dominant position, increasing regulations in various countries are starting to affect USDT. This article provides a detailed explanation of the relationship between USDT and regulations.

What is USDT?

USDT is a stablecoin pegged to the US dollar, combining value stability with the convenience of cryptocurrency. It is adopted as a base currency on many exchanges and is widely used for trading with other crypto assets such as Bitcoin and Ethereum.

Impact of Increased Regulations

European Union (EU) MiCA Regulation

In the EU, the comprehensive crypto-asset regulation bill “MiCA (Markets in Crypto-Assets)” has been enacted, imposing strict requirements on stablecoin issuers. Specifically, the following conditions are included:

• Obtaining an e-money license
• Ensuring transparency of reserves
• Compliance with KYC (Know Your Customer) and AML (Anti-Money Laundering) standards

If these requirements are not met, USDT may be delisted from exchanges. In fact, USDT has already been removed from some exchanges in Europe, raising concerns about the impact on market liquidity.

Regulatory Trends in the United States

In the United States, OFAC (Office of Foreign Assets Control) is said to be able to regulate USDT’s offshore activities to some extent. Furthermore, Tether is under scrutiny due to suspicions regarding its reserves and transparency, which could lead to further regulatory tightening.

Tether’s Reliability and Challenges

For many years, Tether has been subject to suspicions that it does not hold reserves equal to the amount of USDT issued. This issue is known as the “Tether controversy” and has not been fully resolved even by the reports published by the company. As a result, investors have raised concerns about its reliability.

Counterparty Risk

Since USDT has a centralized management system, it heavily relies on Tether, the issuer. If the company faces scandals or bankruptcy, there is a risk that its value could be lost instantly. This kind of counterparty risk is a characteristic that differs from decentralized currencies like Bitcoin.

Impact of Increased Regulations on the Market

Due to the MiCA regulation and developments in the United States, the following market impacts are expected:

• Liquidity Crisis: Decreased liquidity due to USDT delisting
• Shift to Alternative Currencies: Promotion of migration to other stablecoins (e.g., USDC) or fiat currencies
• Market Disruption: Changes in trading methods by traders and destabilization

Background of Digital Dollar Removal

Under the EU’s “MiCA” regulation, stable currencies must meet the following conditions:

• Obtaining licenses and regulatory compliance
• Ensuring consumer protection and financial stability
• Prevention of money laundering
• Asset classification and risk management
• Advertising restrictions and phased application

Digital dollars that do not meet these conditions will be removed, and investors and traders will need to explore other options.

Pi Network as an Alternative

Pi Network is said to have characteristics that comply with the “MiCA” regulation, such as transparency, security, and investor protection. It is particularly focused on preventing money laundering and protecting users, and is gaining attention as an alternative to digital dollars.

Currently, Pi Network is in a critical phase towards its mainnet launch. The goal of migrating 100,000 wallets is nearing completion, and if this condition is met, the mainnet could be launched in early 2025.

Expectations for Pi Network’s Success

The Pi Network team positions this launch as a “historical event,” and many users are eagerly awaiting its outcome. However, there are still several challenges to its realization, such as the number of wallet migrations and security measures.

Advice for Users

When using Pi Network or other cryptocurrencies, security measures are extremely important. Recently, wallet theft incidents have increased, and the following measures are recommended:

• Store your wallet password in a safe place
• Do not share your 24-word recovery phrase with third parties
• Utilize highly secure methods such as fingerprint authentication

Summary: Will Pi Network Carry the Future?

After the removal of digital dollars, the stable currency market requires new options. If Pi Network is considered a candidate, it is expected by many users. However, its success requires compliance with regulations and addressing technical challenges.

USDT still plays a significant role in the stablecoin market, but its position is being shaken by increased regulations in various countries. The strict requirements being introduced, particularly in the EU and the US, could have a major impact on the entire market.