Tether CEO: MiCA Risks Bank Runs, Not Stability

• Tether CEO warns MiCA’s 60% EU reserve requirement poses systemic risks for stablecoins.
• Ardoino cites bank instability, like SVB’s collapse, as a risk in MiCA’s stablecoin regulations.
• Dialogue urged between crypto leaders and EU regulators to secure financial market stability.

Tether CEO, Paolo Ardoino, has expressed concerns over the European Union’s new Markets in Crypto-Assets (MiCA) regulation . Ardoino believes that this crypto regulation could create risks for stablecoin operators like Tether and the wider banking sector. Effective from June 30, this regulation imposes strict requirements on the management of stablecoins within the European Economic Area.

The MiCA framework demands that a substantial portion of stablecoin reserves , precisely 60%, be held in EU bank accounts. Ardoino has criticized this aspect, suggesting it introduces systemic risk.

Ardoino expressed that the problem with MiCA is that instead of making the system more secure, it’s creating a considerable systemic risk. He acknowledged the risk of financial institutions that operate under fractional reserve banking, where only a fraction of deposits are available for withdrawal, potentially leading to ‘bank runs.’

Ardoino also highlighted recent crises in the banking sector, such as the collapse of Silicon Valley Bank in 2023, to illustrate the dangers of the new regulatory demands. He noted that the recent collapse of Silicon Valley Bank is a stark example of the risks involved, pointing out that the incident nearly brought down even their main competitor.

Additionally, he referred to the de-pegging incident with USDC, another primary stablecoin, during the bank’s failure to underline his point that the required banking arrangements for stablecoin reserves might not be as secure as intended.

In a recent YouTube interview , Ardoino further clarified on how Tether (USDT) is handling the financial landscape amidst these challenges. He mentioned that Tether has helped hundreds of millions opt out of failing national economies, acknowledging the digital currency’s role in providing an alternative amid global financial instability.

Additionally, he raised the prospect of the U.S. potentially establishing a strategic Bitcoin reserve , which could affirm the legitimacy and encourage broader acceptance of crypto assets like Bitcoin and Tether globally.