Tether CEO: Instead of Making the System Safer, MiCA Creates Incredibly Large Systemic Risk

The European MiCA bill, designed to regulate the crypto market, poses a threat not only to stablecoins but also to the banking industry, according to Tether CEO Paolo Ardoino.

“Instead of making the system safer, the new rules create incredibly large systemic risk,” he said.

The new rules for stablecoins, approved by the European Parliament, came into force at the end of June this year. They introduce strict restrictions for participants in stablecoin transactions across the EEA. One of these rules is the requirement to keep at least 60% of reserves in European banks.

As Outlier Ventures head of research Jasper De Maere previously noted, the maximum trading volume will be limited to €200 million, which is significantly less than the average monthly trading volume of the USDT stablecoin, which is approximately $30 billion.”

Paolo Ardoino, in turn, pointed out the risks associated with the vulnerability of financial institutions. He recalled the collapse of SVB, against the backdrop of which USDC lost its peg to the US dollar.

According to Tether CEO, the insurance amount for deposits in the EU does not exceed $100,000. And this, Ardoino is sure, is too little for large issuers.

“Silicon Valley Bank went belly up — we all know about that, and our main competitor almost died,” Ardoino explained. “So, I think we have a very, very recent example of why that is a bad idea,” Ardoino explained.

He previously stated that his company was in talks with the regulator about the possible risks for stablecoins due to MiCA. Ardoino thinks that the requirement to keep reserves in uninsured deposits is “not a good idea.”

Do you agree with the Tether CEO?