Tether CEO expressed concerns about the EU's MiCA crypto regulatory law

Tether CEO Paolo Ardoino believes that the regulations in the EU's MiCA law for stablecoins have many requirements that cause trouble. These requirements not only make the process of issuing stablecoins more complicated, but also make stablecoins considered safe by the EU more risky to operate.

Tether CEO Paolo Ardoino has expressed concerns about the impact of the MiCA law on stablecoins approved for trading in Europe. He talk that:

“The EU MiCA regulation has complex requirements, increasing risks for stablecoin issuers in Europe. As with any large-scale regulatory framework, we need further discussions to clarify regulatory standards.”

As reported, the European Union's (EU) Markets in Crypto Assets Bill (MiCA for short) will take effect at the end of June 2024. Initiated in September 2020, the bill requires the European Central Bank (ECB) to establish unified rules for providers and issuers of crypto assets in the EU. This bill was officially approved by the European Parliament in April 2023.

The above concerns arise from clearly defining technical standards for stablecoins. More notable is the requirement that stablecoin issuers need to keep an amount of cash equivalent to 60% of the value in reserves at banks.

In April 2024, Mr. Paolo Ardoino emphasized that storing large amounts of cash in banks is extremely risky if that bank is at risk of bankruptcy. Like the collapse of SVB Bank in 2023, which led to the 2nd largest stablecoin in the world, USDC, falling heavily.

He proposed that stablecoins should be allowed to hold their entire reserves in US Treasury bonds. In case the bank goes bankrupt, these bonds will be returned to the owners.

According to a report in May 2024, Tether currently holds 110.28 billion USD in assets to guarantee 110.54 billion USDT issued to the market. The largest share is still US Treasury bonds with more than 92.6 billion USD (both directly and indirectly).

Tether has actively "joined hands" with partners in Europe to comply with MiCA laws and list USDT and other tokens. Although confident in USDT's ability to meet MiCA requirements, Tether still emphasized the need to develop reasonable regulatory policies for stablecoins, to protect the interests of users in the crypto market.

Previously, Binance said it would limit stablecoin access in Europe from June 30. At the same time, Binance did not mention banning Tether's USDT stablecoin in its announcement. In the blog that Binance posted, the world's largest cryptocurrency exchange also said that the upcoming MiCA law could pose a challenge:

“Currently there are very few stablecoins that meet regulation but the liquidity may not be enough to meet the needs of the entire crypto market.”