Regulation
Tether CEO challenges MiCA rules on stablecoins and cryptos
Paolo Ardoino, The Tether CEO recently expressed criticism of the EU’s MiCA regulation, arguing that the rules on risky bank deposits undermine the security of stablecoins and limit access to the crypto market.
Let’s see all the details below.
New MiCA Regulation Hurts Crypto and Stablecoin: Tether CEO’s Opinion
As expected, Tether CEO Paolo Ardoino criticized the upcoming regulation of Cryptoasset markets (MiCA), in particular the rule that requires stablecoin issuers to hold reserves in bank deposits.
This criticism comes as the cryptocurrency industry prepares for the implementation of these regulations on June 30, with many platforms like Binance move their operations to Europe.
Ardoino expressed concern that the MiCA provision, which requires 60% of stablecoin reserves to be bank deposits, could complicate and make riskier stablecoin operations.
He also stressed that the European Central Bank only insures bank deposits up to 100,000 euros. An amount therefore negligible compared to the market capitalization of stablecoins like Tether’s USDt, which amounts to approximately 110 billion dollars.
Additionally, Ardoino expressed concerns based on recent events, such as the failure of the Silicon Valley Bankwhich demonstrated the vulnerability of large uninsured bank deposits.
He indeed highlighted the risks for stablecoins like Tether’s USDT, mainly backed by US Treasuries rather than bank deposits, thus broadening the focus on this aspect.
According to Ardoino, in the event of a bank failure, bank deposits are protected by bankruptcy laws, which could harm stablecoin issuers.
However, Tether currently invests the majority of its reserves in short-term US government bonds, which are cash equivalents and can be sold immediately.
This strategy offers major security in the event of the collapse of a bank, this allows the securities to be recovered quickly.
MiCA Regulation: the adaptation of the main crypto exchanges
As the deadline approaches, major cryptocurrency exchanges like Binance, OKX and Kraken are ready to review their products in Europe.
For example, Binance announced that starting June 30, it will limit the use of “unauthorized” stablecoins, in line with the implementation of MiCA regulations.
The move reflects the general trend in the crypto industry, with exchanges preparing for the new rules by trying to minimize the impact on their European customers.
Binance’s decision to limit certain features rather than completely removing certain coins shows the flexibility of the system. exchange in response to the evolving regulatory environment.
In an interview, Tether CEO pointed out that the bank deposit requirement stipulated by MiCA could affect European stablecoin users.
Ardoino observed that this new regime could make stablecoins less accessible to European users, who are generally more sophisticated and liquid, thus threatening their stability and reliability.
According to him, it is a to move back for Europe, as this could negatively impact the availability and security of stablecoins for European investors and users.