- Tether CEO criticizes MiCA’s reserve policy, which can affect the future of stablecoins in Europe.
- According to the new policy a minimum of 60% stablecoin reserves are to be held under EU banks.
- Ardoino warned that if the policy was implemented, it would collapse others like Silicon Valley Bank.
Tether CEO Paolo Ardoino has shed light on the recent reserve rule of Markets in Crypto-Assets (MiCA). He stated that if the policy is implemented, it can affect stablecoins in the European market. According to a source on X, Tether CEO said that the recently approved MiCA posed a threat to stablecoins and banks by putting a 60% cap on its policy. Ardoino emphasized that this action would complicate the structure and increase systematic risks.
In a recent YouTube interview, Ardoino emphasized that many financial organizations operated under fractional reserve banking. This indicated that only a few deposits were available for withdrawal and that it made many vulnerable, leading to ‘bank runs.’ Initiated on June 30, the regulations have brought strict requirements on the stablecoin management within the European Economic Area. The policy demands at least 60% of reserves to be held under EU bank accounts.
Circle Emerges as Major Beneficiary of MiCA Stablecoin RegulationsOn a personal note, Ardoino implied that the EU deposits are insured only till $100,000, which he considers inadequate for Tether. Additionally, he pointed to the collapse of the Silicon Valley Bank (SVB) in 2023 as an example to illustrate the risks of the new policy. He remarked,
Silicon Valley Bank went belly up — we all know about that, and our main competitor almost died. So, I think we have a very, very recent example of why that is a bad idea
Not only Tether, the new MiCA’s reserve policy had an impact on other firms as well. Earlier, Binance – the world’s largest cryptocurrency exchange – announced new changes in its functionality due to MiCA regulations. Posting a thread on X in June, it said, “Under upcoming MiCA rules, some stablecoins will face restrictions as unauthorized stablecoins.”
