EU Central Banks Push to Repeal Rule Threatening Tether's European Presence

Tether, the company behind the USDT stablecoin, has chosen not to apply for an official European license due to a strict rule 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 are now asking European lawmakers to delete this rule entirely, citing that it creates big risks for local banks.

Central bankers argue that if crypto markets swing and users cash out tokens quickly, stablecoin firms would have to pull huge cash amounts out of commercial banks overnight. To mitigate this risk, they want token firms to hold quick-cash assets that pay out within one to five days instead.

Tether's CEO Paolo Ardoino has expressed concerns about the safety of customer funds, stating that European deposit insurance only covers up to 100,000 euros if a bank fails. Keeping billions in cash at commercial banks leaves token reserves at risk if a lender goes under.