ECB Backs Tether on Stablecoin Rule, But USDT Compliance Woes Persist

The European Central Bank (ECB) and other central banks have expressed concerns about one of the key rules in the Markets in Crypto-Asset (MiCA) regulation, which affects stablecoins. The rule requires issuers to hold at least 30% of their reserves in commercial bank deposits for smaller stablecoins, increasing to 60% for larger ones.

In a response to a review of MiCA, the European System of Central Banks (ESCB) has proposed removing this requirement. They argue that forcing issuers to hold large bank deposits could create another source of financial risk, as companies may struggle to withdraw funds quickly enough in times of high demand.

This proposal echoes concerns raised by Tether's CEO, Paolo Ardoino, in 2024, who argued that the deposit requirement could leave stablecoin issuers dependent on banks that might not have sufficient cash during a withdrawal rush.