Tether CEO Paolo Ardoino has raised concerns regarding new European Union regulations on stablecoin reserves, discussing potential implications for financial stability in Europe.
Critique of Stablecoin Regulations
The European Union has implemented the MiCA framework to regulate stablecoin reserves in banking institutions. Paolo Ardoino expressed concern that the new requirements resemble dangerous banking practices from the past. He pointed out that 'bank insurance in Europe is only 100,000 euros', which puts large asset holders at risk, as mandated reserves could end up in uninsured banks.
Restrictions on USDT on European Exchanges
Some European exchanges, such as Kraken, have begun to restrict access to USDT in response to regulatory challenges. This may lead to a shift in market preferences towards other stablecoins or fiat-backed digital assets, affecting the liquidity and stability of trading.
Parallels with the Silicon Valley Bank Collapse
The current situation echoes the collapse of the Silicon Valley Bank, which Ardoino cited to illustrate potential fallout from flawed policies. Industry experts suggest that regional regulatory pressures may lead to an increase in euro-backed stablecoins due to compliance challenges.
Ardoino's critique of the new EU regulations reflects concerns about possible negative outcomes for financial stability in Europe and the need for a careful approach to stablecoin regulation.
