Tether Rejects EU Stablecoin Rules Over Counterparty Risk Concerns

Tether, the company behind the popular stablecoin USDT, has been under scrutiny for its decision not to seek authorization in the European Union (EU) under the Markets in Crypto-Assets (MiCA) regulation. According to Tether CEO Paolo Ardoino, the main reason for this decision was the requirement that significant stablecoins must hold at least 60% of their reserves in commercial bank deposits.

Ardoino argued that such concentration introduces counterparty risk instead of strengthening reserve safety. This position is partly shared by the European Central Bank (ECB) and national central banks across the EU, which have recommended removing fixed deposit thresholds. Instead, they propose liquidity requirements based on assets capable of maturing within one working day and five working days.

The ECB has cited the 2023 collapse of Silicon Valley Bank as an example of the risks created by deposit requirements. In that incident, Circle disclosed that $3.3 billion backing USDC was held at the failed lender when regulators closed the bank.