Tether Develops New USDT Technology in EU, Following Coinbase Announcement to Delist Non-MiCA-Compliant Stablecoins
A new technology for USDT on the European market
Tether has announced its intention to develop a technology solution specifically for the European market. This follows Coinbase’s announcement that it will remove all non-MiCA-compliant stablecoins from the European market by December 30, 2024.
Tether to unveil new tech solution for European market https://t.co/yRYo8ElSIw
— Paolo Ardoino 🤖🍐 (@paoloardoino) October 4, 2024
Adaptation to the new regulatory scenario
Tether CEO Paolo Ardoino has highlighted that aspects of MiCA complicate the operation of stablecoins in the EU. Regulatory changes like these can pose risks to local banks and stablecoins themselves. Despite this, Tether has praised European regulators for creating a clear regulatory environment that is essential for the growth of the sector.
In a tweet, Ardoino said that “uninsured cash deposits are not a good idea.” He also noted that “if a bank fails, uninsured deposits could be lost. This exposes stablecoins to systemic risks.”
Just to correct the statement: we're still discussing with the regulator about our concerns that I expressed in our interview, that would pose severe risks to stablecoins regulated in EU.
Uninsured cash deposits are not a good idea.
We should learn from what happened with…
— Paolo Ardoino 🤖🍐 (@paoloardoino) April 11, 2024
Risks and solutions for stability
According to Ardoino, the new rules impose capital constraints, but do not provide the guarantees needed to maintain stability. He warned of the risk of a liquidity flight, similar to that observed with the failure of Silicon Valley Bank in 2023, which led to a chain reaction that also affected the stablecoin sector. USDC in particular, saw a depeg of more than 10% following investor fears that part of the collateral backing USDC could be lost.
To ensure stability, he suggested that stablecoins should keep 100% of their reserves in government bonds, rather than in uninsured cash deposits. This approach is essential to avoid crises and protect investors.
