A Tether decided not to apply for a license under the European MiCA regulation because of the requirement that may force stablecoins considered significant to hold 60% of reserves in bank deposits, said CEO Paolo Ardoino on Tuesday (22). On the same day, European central banks recommended removing that obligation from the legislation.
Under current rules, stablecoin issuers must hold part of their reserves in credit institutions. Ardoino said that Tether avoided seeking authorization in the European Union because it considers that high exposure to commercial banks increases the counterparty risk of USDT.
ECB wants to replace deposits with liquidity requirements
The European System of Central Banks (ESCB) proposed eliminating mandatory minimum percentages of bank deposits and replacing them with rules based on how quickly reserve assets can be converted into cash.
For significant stablecoins, the proposal stipulates that at least 40% of reserves be available within one business day and 60% within five business days.
At the same time, the ESCB advocates expanding the prohibition on yields associated with stablecoins. The restriction could extend to structures of lending, borrowing and staking used to offer economic returns tied to holding these tokens.
The recommendations still do not change MiCA. The European Commission is reviewing the application of the regulation and may propose legislative changes after the consultation process.
