Following Binance's announcement to restrict access to "unauthorised" stablecoins in Europe by the end of the month, Tether CEO Paolo Ardoino has expressed his concerns about the European Regulation on Crypto-Asset Markets (MiCA) and its impact on stablecoins.
"Tether has been actively involved in consultations on regulatory technical standards over the past few months and remains concerned that MiCA contains several problematic requirements," Ardoino told The Block. "These requirements could not only make the work of a stablecoin issuer extremely complex, but also make EU-licensed stablecoins extremely vulnerable and riskier to exploit. As with any regulatory framework of this scale, further discussions on technical implementation standards are crucial to clarify certain market provisions," he added.
On Monday, Binance, the world's largest crypto-currency exchange by transaction volume, announced that from 30 June it would restrict access to "unauthorised" stablecoins. The company did not mention Tether's USDT stablecoin, the largest in circulation, but it remains unclear whether MiCA will affect European access to this stablecoin.
Binance CEO Richard Teng clarified in a post on X on Monday that ‘Binance will not delist stablecoins not allowed on the spot, but will limit their availability to [European] users only on certain products’ adding "updates on regulated stablecoins will be shared soon."
While Binance has said it will begin restricting access to ‘unauthorised’ stablecoins, rival exchanges OKX and Kraken must also consider the potential impacts of MiCA. Last month, Kraken was actively examining the possibility of withdrawing USDT, according to a report. In March, OKX announced it was ceasing to support USDT trading pairs in Europe, according to The Block.
Binance appeared to concede on Monday that impending regulation could pose challenges. "Currently, there are few regulated stablecoins with limited liquidity that may not be sufficient to meet sudden demand in the industry," the platform said in a blog post.
In April, Ardoino posted on X that ‘we are still discussing with the regulator our concerns’ about possible EU capital reserve requirements. "Uninsured cash deposits are not a good idea," he added. "We should learn from what happened with Silicon Valley Bank and another major stablecoin in the US. If a bank goes bust, uninsured cash deposits go bust. Stablecoins should be able to keep 100% of their reserves in Treasury bills, rather than exposing themselves to bank failures by keeping a large proportion of reserves in uninsured cash deposits. In the event of a bank failure, the securities revert to the rightful owner."
The vast majority of the approximately $110 billion of USDt in circulation at the end of the first quarter was backed by US Treasuries, according to a statement published last month.
Ardoino said, as the effective dates for stablecoin issuers and crypto-asset service providers in the EU approach, that "Tether has engaged in extensive discussions with its exchange counterparties in Europe regarding requirements, including those relating to the ongoing listing of USDt and other Tether tokens, as well as the interpretation of key regulatory provisions."
While Tether is "optimistic about the implementation of MiCA," it remains "critical that stablecoin regulatory policies are balanced, protect consumers and promote the growth of our emerging industry," Ardoino said.
Currently, under MiCA, to be a regulated stablecoin provider in the EU, issuers must have an Electronic Money Institution (EMI) licence. This requirement could be positive for users, but only if the EU takes it seriously, Jon Egilsson, co-founder of Monerium, told The Block.
"The EMI licence is mainly for consumer protection and to ensure the uniqueness of the currency," Egilsson said. "But it won't work unless regulators enforce the law, and EU regulators have failed so far."
Monerium was the first company to receive an EMI licence to legally issue stablecoin in Europe, according to Egilsson.
