Tether CEO: MiCA regulation poses “systemic risk” to stablecoins and even the banking system

Tether CEO Paolo Ardoino said in an interview that the EU Crypto-Asset Markets (MiCA) regulation poses a systemic risk to stablecoins and even the broader banking system. Ardoino said: "My problem with MiCA is that instead of making the system safer, it actually creates a huge systemic risk." The MiCA regulation came into effect on June 30 and imposes strict restrictions on stablecoin operations across the European Economic Area. Notably, it requires that at least 60% of the reserves backing stablecoins must be held in EU bank accounts. Ardoino stressed that financial institutions practice fractional reserve banking, where only a small portion of deposits are available for withdrawal at any given moment, which makes them vulnerable to bank runs. He further pointed out that the insurance coverage for cash deposits in the EU is only $100,000 - an amount that he believes is insufficient for large stablecoin issuers like Tether. (Cointelegraph)