TLDR:
- Tether says MiCA’s 60% bank-deposit rule was a key reason it declined to seek authorization in the EU.
- MiCA requires significant stablecoins to keep at least 60% of reserve funds in commercial bank deposits.
- Tether reported $184.6B in USDT outstanding, with assets exceeding liabilities by about $4.11B in Q2.
- EU central banks now want fixed deposit thresholds replaced with one- and five-day liquidity requirements.
Tether’s refusal to seek European authorization is gaining renewed attention after central banks questioned one of the rules behind the company’s decision. CEO Paolo Ardoino said the issuer avoided licensing under MiCA because significant stablecoins must place at least 60% of reserves in commercial bank deposits.
He has argued that such concentration introduces counterparty risk instead of strengthening reserve safety. That position now overlaps partly with concerns raised by the ECB and national central banks across the EU. They recommended removing fixed deposit thresholds, although existing requirements remain unchanged.
Tether MiCA Exit Centers on 60% Bank Reserve Rule
MiCA requires e-money token issuers to hold at least 30% of backing funds in deposits with credit institutions. However, the threshold increases to 60% once a stablecoin receives significant status.
The remaining reserves can include secure and highly liquid assets, giving issuers some flexibility outside the banking system. Still, Ardoino has opposed mandatory concentration in commercial deposits.
His argument centers on the possibility that a bank failure could temporarily trap reserves needed to process stablecoin redemptions. The 2023 collapse of Silicon Valley Bank provided a prominent example of that exposure.
Circle disclosed that $3.3 billion backing USDC was held at the failed lender when regulators closed the bank. The episode briefly intensified concerns over reserve access and stablecoin liquidity.
The ECB has also cited that event while assessing the risks created by deposit requirements. It said bank defaults could expose issuers to losses while strengthening links between crypto markets and lenders. Tether, however, follows a different reserve structure.
At the end of June, the company reported $184.6 billion of USDT outstanding. Its reserves were concentrated mainly in U.S. government-backed instruments and short-term liquidity facilities. Meanwhile, reported assets exceeded liabilities by approximately $4.11 billion.
ECB and EU Central Banks Push for Liquidity-Based Rules
The European System of Central Banks has now recommended dropping fixed minimum percentages for stablecoin reserves held as commercial bank deposits. Instead, it proposed liquidity requirements based on assets capable of maturing within one working day and five working days.
However, the central banks reached that position through a broader financial-stability concern. They warned that stablecoin growth could change the composition of funding held by European lenders. Stable retail deposits could increasingly be replaced by larger deposits from issuers.
Those balances could also prove more volatile during periods of heavy redemptions. A widespread stablecoin run could therefore force issuers to withdraw substantial bank deposits quickly, potentially adding liquidity pressure to exposed institutions.
Regardless, the recommendation does not change MiCA immediately. Any revision would still require the EU’s regulatory process to amend the existing framework.
Consequently, the 30% and 60% deposit thresholds remain effective. Tether also remains without MiCA authorization for USDT despite growing official scrutiny of the rule behind its decision.
The post Tether Says MiCA’s 60% Reserve Rule Drove EU Exit as ECB Seeks Change appeared first on Blockonomi.
