Crypto.com announced on January 29 that it would begin delisting USDT and nine other tokens in Europe starting January 31 to comply with MiCA regulations. Tether responded by criticizing the hasty nature of these actions, stating: “Such moves have been rushed with statements that do little to clarify the rationale behind these decisions.”

MiCA’s Potential Risks to the European Crypto Market

Tether has raised concerns that MiCA-driven changes pose significant risks to consumers and the local crypto market. With exchanges like Crypto.com preparing to delist numerous tokens, Tether warns that this could create a “disorderly” market in Europe, adversely affecting consumers.

Tether anticipates that these changes will place additional risks on European consumers, as MiCA regulations are still in the early stages of implementation. The impact extends beyond USDT, as several other tokens in the European market are also being affected.

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Coinbase, which delisted USDT in December 2024, also announced it had removed a total of eight tokens to comply with MiCA. The exchange previously delisted Wrapped Bitcoin (WBTC) for other reasons, stating that it would reassess the re-enabling of services for stablecoins that achieve MiCA compliance at a later date.

Tether Finalizing Its European Strategy

Tether emphasized that MiCA makes the operation of stablecoins in Europe more complex and introduces new risks. Additionally, it pointed out that the use of USDT in Europe is significantly lower compared to emerging markets where the stablecoin is very popular.

Despite these challenges, Tether continues to invest in innovative technologies like Hadron and projects such as Quantor, designed to be MiCA-compliant, while finalizing its European strategy for USDT.

The European Securities and Markets Authority (ESMA) has urged crypto asset service providers (CASPs) to restrict non-MiCA-compliant stablecoins by the end of January 2025, allowing them to be listed in sell mode until March 31, 2025, before a full ban on non-compliant stablecoins takes effect.

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Until March 31, Tokens Can Be Converted

Crypto.com will stop trading USDT and nine other tokens as of January 31. However, users will have until March 31, 2025 to withdraw or convert these tokens into MiCA-compliant assets. Any tokens not converted after this date will be automatically converted by the exchange into MiCA-compliant stablecoins or assets equivalent in value.

Crypto.com’s representative stated that this process is an important step to protect users and ensure full compliance with the regulatory framework.

Which Tokens Will Be Delisted?

Among the tokens that Crypto.com will delist are the following:

• Tether (USDT)
• Wrapped Bitcoin (WBTC)
• Dai (DAI)
• Pax Dollar (PAX)
• Pax Gold (PAXG)
• PayPal USD (PYUSD)
• Crypto.com Staked ETH (CDCETH)
• Crypto.com Staked SOL (CDCSOL)
• Liquid CRO (LCRO)
• XSGD (XSGD)

These tokens are being delisted in line with the European Securities and Markets Authority’s (ESMA) announcement to limit non-MiCA-compliant stablecoins as of January 31, 2025.

Expanding Delist Trend for Tether (USDT)

Crypto.com’s delisting of USDT is one of the latest developments in the process of European exchanges and service providers adapting to MiCA regulations. Coinbase had delisted USDT in October 2024 on the grounds that it was not MiCA-compliant . Coinbase had given its customers the option to convert their USDT into MiCA-compliant stablecoins, specifically Circle’s USDC.

With MiCA in full effect, many crypto asset service providers in Europe have obtained or are working to obtain MiCA licenses. Crypto.com is also in the process of obtaining a license in Malta.

The Competition Between USDT and Its Rivals

USDT is the largest stablecoin in the market with a market capitalization of $139 billion. However, its rival USDC, which benefits from MiCA compliance, is currently in second place with a market capitalization of $52 billion. Circle’s USDC was approved as MiCA-compliant in July 2024, enabling the USDC to gain acceptance in the European market.

Impact of MiCA Regulations on the Industry

MiCA regulations aim to make the operations of crypto asset service providers more transparent and compliant. However, the fact that the market’s largest stablecoins, especially USDT, are not covered by MiCA may affect investors’ preferences. After March 31, USDT is expected to be completely abolished in Europe, and the impact of this on the market is a matter of curiosity.

Crypto.com’s move is seen as an important milestone on the road to compliance with MiCA regulations. However, these changes could reshape the dynamics of the cryptocurrency market.

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On Monday, the Avalanche (AVAX) network will undergo the Etna upgrade, aiming to enhance network performance. Meanwhile, the FLOKI community is preparing for a much-anticipated marketing announcement. A key development is the ARB token unlock, with 93.65 million ARB tokens worth $91 million being released, potentially increasing selling pressure. Additionally, Ethena and BlackRock will share updates about their stablecoin, USDTb, while Cardano (ADA) will see the unlocking of 18.53 million tokens, valued at $20 million, raising concerns among ADA investors.

On Wednesday, economic reports and gaming partnerships will dominate the agenda. The Eurozone’s annual inflation rate will be announced, which could indirectly impact crypto markets. Another key event is the launch of Captain LaserHawk, a game developed by Ubisoft in collaboration with Arbitrum (ARB), potentially driving interest in ARB. However, the day’s highlight is the FED’s interest rate decision and subsequent statements from FED Chair Jerome Powell. Any rate adjustment or Powell’s comments could lead to volatility in Bitcoin and altcoins.

On Thursday, the focus shifts to the U.S. with the release of GDP figures. Any deviation from expectations could affect market sentiment. Additionally, Coinbase will delist Wrapped Bitcoin (WBTC), which might raise concerns for Bitcoin-linked projects. The LayerZero community will also hold a referendum to activate the fee switch feature, which could significantly impact ZRO token dynamics.

Finally, on Friday, the U.S. will release the Core Personal Consumption Expenditures (PCE) index, a key inflation metric. This data could influence how the FED adjusts its policies, potentially driving market volatility.

This week’s developments, including token unlocks for ARB and ADA, may increase selling pressure, while major economic data from the U.S. and FED decisions will shape overall market direction. On a positive note, partnerships like Ubisoft’s Arbitrum-based game might drive interest in specific tokens.

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EigenLayer is a restaking protocol on Ethereum that allows assets like Staked Ether (STETH) to be repurposed and staked multiple times. This provides investors with additional yield opportunities while enabling other protocols to leverage Ethereum’s security. EigenLayer has positioned itself as a critical component of the Ethereum network’s infrastructure, drawing both praise and concern from the Ethereum community.

The Growing Popularity of Restaking

Restaking has been seen as a way to bring new capital into the crypto ecosystem, and it has the potential to create a new asset class. By allowing protocols to use restaked assets for network security, restaking alleviates the need for launching a token to secure the network, significantly lowering the barrier for developers and decentralized applications (DApps).

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According to DefiLlama, restaking protocols currently have a total value locked (TVL) of approximately $26.9 billion, with EigenLayer accounting for the majority of this, holding around $18.2 billion.

The EIGEN token gained significant attention, entering the top 100 cryptocurrencies by market capitalization in October due to the rise of EigenLayer. However, it has since dropped out of the top 100 and is currently ranked 108th by market cap.

In November, EigenLayer expanded its restaking options to include Wrapped Bitcoin products, allowing users to stake uniBTC on the ARPA Network, a protocol built on EigenLayer, in exchange for yield.

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In a recent statement, Sun took aim at cbBTC, a Bitcoin alternative introduced by Coinbase, questioning its transparency and decentralization. He particularly pointed out the lack of proof of reserves and insufficient auditing.

Sun accused Coinbase of having the ability to freeze balances at will, raising concerns about the centralization risks inherent in cbBTC. “cbBTC lacks proof of reserves, has no audits, and can freeze anyone’s balance at any time. It’s essentially saying ‘just trust us,’” Sun remarked, adding that any subpoena from the U.S. government could result in the seizure of all related Bitcoin holdings.

He even dubbed cbBTC as “central bank Bitcoin.”

His sharp critique comes amidst growing discussions about Sun’s involvement in the governance of Wrapped Bitcoin (WBTC), which has further fueled debate.

Sun concluded his comments by highlighting a stark contrast between Bitcoin’s foundational principles and what cbBTC represents. He stated, “There’s no more absurd combination in the world than central banks and Bitcoin. I believe this is a reality that Satoshi Nakamoto could never have envisioned when creating Bitcoin.”

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When WBTC was first launched, BitGo was chosen as a partner due to its strong reputation for security. However, Meow has questioned the clarity surrounding who controls the multi-signature wallets backing WBTC and whether these Bitcoin could be used for purposes other than securing WBTC.

Key Questions Raised

Who controls the multi-signature wallets holding the underlying Bitcoin?
Could the Bitcoin be used for any other purpose?
What are the benefits of this partnership for both parties, and how does it benefit the TRON ecosystem?
How does cross-jurisdiction help?
Is it possible for a highly reputable, independent third party to join the multi-signature group as both a communicator and signer?

Meow’s concerns highlight the importance of transparency and accountability in the DeFi ecosystem. The recent partnership between BitGo and BiT Global aims to diversify the custody and cold storage of WBTC, ensuring its security across different jurisdictions. However, the lack of clarity around the multi-signature wallets remains a concern for many in the community.

The Need for Transparency

The inclusion of a highly respected, independent third-party in the multi-signature process could significantly enhance transparency and trust. This third party could act as both a communicator and a signer, providing additional oversight and ensuring that the underlying Bitcoin is used solely to back WBTC.

While the partnership between BitGo and BiT Global is a step in the right direction, the industry must continue to prioritize transparency and security. As the DeFi ecosystem grows, it is crucial that projects like WBTC maintain the trust of their users by addressing concerns about the security and management of their underlying assets.

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According to data from Arkham Intelligence, between January 8 and 12, Celsius transferred $95.5 million to Coinbase and $29.7 million to FalconX.

However, Celsius still holds more than 550,000 ETH on its books; this number was worth a staggering $1.36 billion at the time of publication.

On January 5, Celsius moved to redeem 206,300 ETH worth $407 million at the time; the lender claimed that the newly released Ether would be used to pay for costs incurred during the restructuring process and to prepare for repayments to creditors.

Celsius has announced that it will distribute Bitcoin and ETH to creditors in its rescue plan, but a specific date on when creditors will begin receiving funds has not yet been announced.

Celsius creditors have been waiting for more than 18 months to receive funds that remained on the platform since the company first filed for bankruptcy in July 2022.

FTX and Alameda Transfer Funds to Exchanges (Celsius)

Celsius was not the only beleaguered firm to move cryptocurrency assets to exchanges recently.

According to data from blockchain analytics platform SpotOnChain, bankrupt cryptocurrency exchange FTX and its defunct trading arm Alameda Research made their own move by transferring $28 million worth of crypto to exchanges on January 14.

The transfers to the Coinbase and Binance exchanges included $18.7 million worth of Wrapped Bitcoin, $8 million worth of Ether, and $1 million worth of Pendle (PENDLE).

After FTX and Alameda Research filed for bankruptcy in November of last year, FTX has been working to raise funds for creditor repayments. FTX executives have successfully recovered approximately $7 billion in assets, including a significant amount of cryptocurrency worth $3.4 billion.

The market has warmed to FTX creditors’ demands; some of them have risen as high as $0.50 per dollar in October of last year, suggesting that creditors have a chance to become whole. While it is unclear when FTX will make repayments to its customers, current plans call for repayments to begin this year.

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