European Central Banks Seek to Abolish MiCA Rule Amid Tether-Licensed Conundrum

Tether, the company behind the USDT stablecoin, has chosen not to apply for an official European license due to strict rules in the MiCA crypto law. The EU rule forces large stablecoin firms to keep 60% of their cash reserves inside normal bank accounts.

However, the European Central Bank and 27 national central banks have asked European lawmakers to delete this rule entirely. They argue that it creates big risks for local banks, as sudden market swings could require token firms to pull huge cash amounts out of commercial banks overnight.

Tether's CEO Paolo Ardoino pointed out that European deposit insurance only covers up to 100,000 euros if a bank fails, leaving token reserves at risk. He wants to protect Tether tokens from risky banks.