Tether Rejects EU Stablecoin License Over Controversial Reserve Requirement

Tether's decision to opt out of EU stablecoin regulation is due to a contentious rule that forces significant issuers to hold at least 60% of their reserves in commercial bank deposits.

According to Tether CEO Paolo Ardoino, this requirement was the primary reason for declining to apply for an MiCA license under Europe's flagship stablecoin framework.

The European Central Bank and other EU central banks have proposed removing this rule, citing concerns that volatile stablecoin deposits can expose banks to sudden withdrawals and concentrated liquidity pressure.

Instead of mandating a fixed share of reserves as bank deposits, the ESCB recommends minimum liquidity thresholds tied to assets maturing within one to five working days.