Regulation
Tether CEO criticizes bank deposit requirements for stablecoins
Tether CEO Paolo Ardoino criticized the upcoming Markets in Crypto-Assets (Not), questioning 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, leading many platforms like Binance to move their operations to Europe.
Tether CEO’s concerns regarding MiCA regulations
Ardoino expressed concern about how the MiCA provision mandating reservations works stablecoins being at 60% of bank deposits could complicate and make the operation of stablecoins more risky. He notes that the European Central Bank, which is the regulator of euro area banks, only insures bank deposits of up to 100,000 euros, which is negligible compared to the market capitalization of stablecoins such as Tether’s USDt which amounts to around 110 billion dollars.
Furthermore, his concerns are based on recent events, including the failure of Silicon Valley Bank, which demonstrated the vulnerability of large uninsured bank deposits. In response to this, Ardoino draws attention to the possibility of risks he would present for similar stablecoins Tether’s USDT supported primarily by US Treasury securities as opposed to bank deposits, extending the focus to this aspect.
Second Ardoino, in the event of a bank failure, bank deposits are protected by bankruptcy laws, which could be harmful to stablecoin issuers. However, Tether in particular currently invests the majority of its reserves in short-term US government bonds, which are cash equivalents that can be sold immediately. This strategy is useful for the recovery of securities in the event of bank failure and therefore offers greater security.
Answers from Binance and the crypto community
As the deadline approaches, major cryptocurrency exchanges such as Binance, OKX and Kraken are ready to review their products in Europe. For example, Binance revealed that it will restrict the use of “unauthorized” stablecoins starting June 30, in line with the MiCA implementation timeline.
This is in line with the general trend in the crypto space where exchanges are preparing for new rules but doing everything they can to avoid affecting their European customers. Binance’s decision to partially limit some features rather than completely remove some coins implies the exchange’s flexibility in responding to the changing regulatory environment.
In an interview, the CEO of Tether He also noted that bank deposit requirements under MiCA could impact European stablecoin users. As Ardoino notes, this new regime could make stablecoins less available to European users who are generally more sophisticated and liquid, which poses a threat to their stability and reliability.
According to him, therefore, this is a step backwards for Europe as it could have a negative impact on the availability and security of stablecoins for European investors and users.
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