Paulo Ardoino, CEO of Tether, expressed concerns regarding the potential banking risks associated with the upcoming Markets in Crypto-Assets Regulation (MiCA) set to take effect on December 30, 2024. Under MiCA, stablecoin issuers must hold at least 60% of their reserves in European banks. This introduces systemic risks, as banks can lend out a significant portion of these deposits. For instance, if a stablecoin issuer manages 10 billion euros, 6 billion euros would be deposited, but a bank can lend out up to 5.4 billion euros of that amount, compromising the issuer's reserve stability. Ardoino also noted that in the event of a bank failure, only 100,000 euros of deposits would be guaranteed, highlighting the vulnerability of stablecoin issuers. He suggested that issuers could hedge against such risks by investing in securities like government bonds. The MiCA regulations could also lead to significant consolidation in the crypto industry, potentially disadvantaging smaller firms, as experts warn of a more predatorial market environment.

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