Tether CEO Says MiCA Rules Are Too Risky for USDT Reserves
Tether CEO Paolo Ardoino has explained why the company chose not to apply for a license under the European Unions Markets in Crypto-Assets (MiCA) framework. According to Ardoino, the regulation creates unnecessary risks for stablecoin issuers instead of making the market safer. He said MiCA requires issuers to keep 60% of their reserves as uninsured cash deposits in European banks. Ardoino argued that such a rule could expose stablecoin issuers to banking risks during periods of heavy redemptions. Tethers decision means $USDT, now valued at roughly $186 billion, has no MiCA authorization and can no longer trade on regulated crypto exchanges across the European Union. Ardoino Points to Reserve Requirements Ardoino‘s biggest criticism focuses on MiCA’s reserve rules. He said a stablecoin issuer managing €10 billion ($11.38 billion) in reserves would have to place €6 billion ($6.83 billion) in uninsured bank deposits across European banks. According to him, many large banks are unwilling to work with stablecoin issuers, leaving smaller banks to hold those funds. He argued that these banks operate on fractional reserve banking, meaning only part of customer deposits remains available as cash. In his example, if users redeemed 20% of a €10 billion stablecoin supply, equal to €2 billion ($2.27 billion), banks might