Tether Rejects EU MiCA License Over Reserve Requirements
Tether, the issuer of the USDT stablecoin, has declined to seek a license under the European Union's Markets in Crypto-Assets Regulation (MiCA) due to a rule requiring major stablecoin issuers to hold at least 60% of their reserves in bank deposits.
The requirement is part of MiCA's regulatory framework, which aims to ensure sufficient liquidity for redemptions. However, the European Central Bank (ECB) and national central banks have raised concerns that this rule could create two-way systemic risk, as stablecoin redemptions could force sudden bank withdrawals.
The ECB has proposed a new approach, focusing on the liquidity of reserve assets rather than fixed deposit requirements. Under this proposal, issuers would be required to hold specified portions of their reserves in assets that can mature or become available within one to five working days.