MiCA Regulations Pose Risks to Banks and Stablecoin Issuers, Warns Tether CEO

MiCA Regulations Pose Risks to Banks and Stablecoin Issuers, Warns Tether CEO

Tether (USDT) CEO Paolo Ardoino has warned that Europe's Markets in Crypto-Assets (MiCA) regulatory framework poses systemic risks to the banking system and stablecoin issuers. "MiCA is a threat to both banks and stablecoin issuers," he said in an interview with Cointelegraph. MiCA, which is set to be implemented in 2024, requires stablecoin issuers to hold at least 60% of their reserves in EU bank accounts. However, Ardoino argues that these reserves are subject to bail-in risk and could potentially be seized in the event of a bank run. "This poses a significant risk to stablecoin issuers, as they could be forced to sell their assets in a fire sale to meet redemption requests," he said. Ardoino also noted that EU deposit guarantees only cover up to €100,000, which is insufficient for large stablecoin issuers like Tether. "This means that if a bank holding Tether's reserves were to fail, Tether could lose a significant amount of its assets," he said. Ardoino urged policymakers to reconsider the MiCA framework and to work with the industry to develop a more balanced approach to stablecoin regulation. "Stablecoins are an important part of the crypto ecosystem, and they should not be subject to regulations that could stifle their growth or put their users at risk," he said.