Yesterday Binance has announced gradual restrictions on unauthorized stablecoins in Europe. An obligatory choice, given the arrival of Notthe set of rules that will regulate the crypto world in Europe and from the next June 30th will already begin to produce its effects.
Regardless of the different approaches of the cryptocurrency exchange, there is a question that interests investors and enthusiasts: who was authorized? Who intends to get authorized? Who will be left out? And why different gods top players in the sector have decided, for the moment, not to be authorized?
The situation is more complex than how the press would like to portray it mainstream: it is not a trivial question of wanting to submit to the rules. And the rules themselves, as we will see with Paolo Ardoino Of Tetherthey are not neutral with respect to the functioning and level of security of the stablecoins involved.
MiCA and authorized crypto stables: we talk about it with Paolo Ardoino
We had already had the opportunity to speak with Paolo Ardoino of what would have happened to MiCA come into forcegiven that for a few weeks there has been talk of the problems he could encounter Tether, the dollar-pegged stablecoin with the highest market capitalization. With the most recent moves of Binancewhich announced gradual restrictions on stablecoins unauthorized in Europe, it’s time to go back and ask Tether’s CEO what the situation actually is – and how it got to this point.
Cryptocurrency.it: Good morning Paolo and thanks for being here with us. What is the main issue of registration in Europe post MiCA? Are there any restrictions that Tether can’t or won’t implement?
Paolo Ardoino: The main problem is that regulation provides a huge risk for issuers [emittenti, NDR] of stablecoins since they will have to keep 60% of reserves in bank deposits. Bank deposits are insured up to EUR 100,000 by the European Central Bank. A small thing compared to the size of a stablecoin like USDt. Furthermore, bank deposits, in the event of a bankruptcy of the custodian bank, are subject to the bankruptcy process. Tether invests reserves in treasury bonds, which are always returned to the owner (Tether) in case of problems with the bank.
The question therefore concerns the reserves and how MiCA requires stablecoin issuers to hold them. To date, Tether USDt has the bulk of its reserves in short-dated US debt securities, which are cash-like – or immediately liquidatable for the equivalent value, and in any case protected from any problems that could arise in the event of bankruptcy or difficulty of the depositing bank. This is a bit like what we saw with the bankruptcy of Silicon Valley Bank, which ended up involving the main competitor of Tetherthat is to say USDC. (here is the story of the SBV collapse and the problems for USDC, if you are not aware of what happened).
Cryptocurrency.it: Reservations chapter: will the regime imposed by MiCA really offer greater security to users? Or do you think it is a worse regime than the current (and free) one chosen by Tether and composed almost entirely of US government bonds?
Paolo Ardoino: Absolutely not, as I said before MiCA currently poses greater risks than the current reserve allocation of a stablecoin like USDt.
Given the irreconcilability between the positions of Tether and those of the European Union, it is necessary to ask ourselves at this point whether or not there is room for negotiation between the large issuer like Tether and precisely those who drafted and then voted on the MiCA.
Cryptocurrency.it: Is there a possibility of seeing an agreement in the future? Is there a chance to see a change in EU rules? And if so, could we see Tether “return” available to European users?
Paolo Ardoino: Let’s hope so. We will continue to work in that direction.
There would therefore be discussions that could offer results in the future, although we cannot be aware at the moment of the point reached and the timing that may be necessary for something to move forward. The risk of no longer having access to Tether at exchanges based in Europe and with a regular license is now more than real, however, given the short time that separates us from the entry into force of these rules.
Cryptocurrency.it: We fear that this new regime will not make stablecoins accessible to European users who are better capitalized, more liquid and ultimately – for these reasons – safer. Do you also think that it is a defeat also and above all for European users?
Paolo Ardoino: Definitely a step backwards for Europe.
A step backwards for Europe?
Let’s follow the matter regulatory in Europe since unsuspecting times and before the MiCA was voted by the highest European institutions. We have had it on our pages too Stefan Berger, the main promoter of this legal frameworkas we have already, in the past, discussed with the main political protagonists at the intersection with cryptocurrencies.
Given the current situation, there is clearly some doubt about whether the right choice is always made. And unfortunately there is less and less time to discuss it.
