ECB Backs Tether on Stablecoin Deposit Rule
The European Central Bank (ECB) has expressed support for Tether's concerns regarding the Markets in Crypto-Assets (MiCA) regulation. The ECB, along with other European central banks, wants to remove a key rule from MiCA that requires stablecoin issuers to keep at least 30% of their reserves in commercial bank deposits. This requirement increases to 60% for significant stablecoins.
The proposed change echoes one of Tether's concerns raised two years ago by Paolo Ardoino, the CEO of Tether, who argued that this rule could leave stablecoin issuers dependent on banks during times of high withdrawal demand. However, despite this development, USDT still lacks regulatory approval and a clear path to compliance with EU platforms.
The European System of Central Banks (ESCB) has warned that forcing issuers to hold large bank deposits creates an additional financial risk. In the event of a large-scale withdrawal, banks may not be able to return the money immediately, especially if they have lent most of it out. The ESCB proposes allowing issuers to hold assets that can be converted into cash within one to five working days.