Digest: Tether CEO Warns MiCA Could Create Systemic Risks for Banks
Tether CEO Paolo Ardoino has expressed concerns that Europe’s MiCA regulations on stablecoins, particularly the 60% cash reserve requirement, could pose systemic risks to banks. In a Forbes interview, he drew parallels to Circle’s 2023 incident with Silicon Valley Bank, emphasizing that this requirement increases risk rather than mitigates it.
Ardoino argued that while MiCA’s trading restrictions may create a safer environment, the high cash deposit requirement could lead to liquidity pressures on banks during large-scale redemptions. For example, if a $10 billion stablecoin must keep $6 billion in cash, a $2 billion redemption could leave banks dangerously under-reserved.
He highlighted that such a scenario could result in bank failures, with stablecoins unfairly blamed for the crisis. This, he believes, underscores the systemic risk posed by MiCA’s regulations.
