While the price of Bitcoin fell more than 3% on the 11th due to strong employment in the United States, there are concerns that the European Union's (EU) stablecoin regulation scheduled for the end of the month may act as another negative factor for the cryptocurrency industry.
What's new: The U.S. Department of Labor announced on the 7th that the increase in employment in the U.S. in May was 272,000. The number exceeded expert estimates by nearly 100,000 .
This employment data served as an indicator that threw cold water on the market's expectations that an interest rate cut could be achieved due to employment contraction and resulting price stability. The price of Bitcoin, which rose to $72,000 that day, continued to decline throughout the weekend, falling to the $66,500 level at one point on the 11th.
Background of the problem: As the US interest rate cut, which was considered a sure keyword for the rise in the second half of the year, becomes uncertain, existing negative factors are receiving attention again. One of the most notable is the EU's stablecoin regulation, which was scheduled for the end of June.
The EU passed MiCA, a cryptocurrency-related regulatory bill, in April 2023. The bill contains comprehensive provisions regulating digital assets across EU member states, with one particularly eye-catching provision on stablecoins. Starting on the 30th, when this bill goes into effect, unauthorized stablecoins will no longer be able to be used throughout the European Economic Area (EEA).
Important Point: What is a permissionless stablecoin? MiCA classifies stablecoins into E-Money Tokens (EMT) and Asset-Referenced Tokens (ART). Stable coins such as USDT and USDT, which are commonly used in the cryptocurrency industry, are included in e-money tokens. To distribute these tokens, the issuer must obtain an Electronic Financial Institution (EMI) license.
USDT, the world's largest stablecoin, is struggling in this area. OKX, a global cryptocurrency exchange, abolished support for USDT trading pairs on the exchange in March. This is because it is unclear whether Tether, the USDT issuer, complies with European Union regulations.
In May, it was revealed that cryptocurrency exchange Kraken was also considering the possibility of abolishing USDT transaction support. Kraken said, “It has not been finalized yet, but we will follow the (European Union’s) legal requirements.” Binance also announced on the 4th that it would follow regulations on unapproved stablecoins .
What's next: In the cryptocurrency world, stablecoins are the type of currency most frequently used to buy coins. Among them, USDT is the most liquid stablecoin. If USDT becomes unusable in the European region after June 30, this could result in a significant decrease in buying pressure for cryptocurrencies such as Bitcoin. It is not yet clear which cryptocurrencies other than USDT are possible.
If expectations of a U.S. interest rate cut, which has led to the rise in Bitcoin prices since mid-May, are revived, the impact of the EU's MiCA bill, which takes effect on June 30, is not expected to be significant. However, if the market is driven by a downward mood, the enforcement of MiCA and stablecoin regulations are expected to be another trigger that encourages the decline.
Trusted
The information contained on the BeInCrypto website is published in good faith and for informational purposes only. Users are solely responsible for any consequences arising from their use of information on the website.
In addition, some content is an AI-translated version of the English version of BeInCrypto articles.
