Tether CEO says there are “problematic requirements” in the EU law on crypto regulation

What’s new? Tether CEO Paolo Ardoino has said that the European Union’s MiCA crypto regulation “contains several problematic requirements” that could make it more difficult for issuers of stablecoins to operate, as well as increase the risks of using such assets with a license.

Material by The Block

What else is known? MiCA, or the Markets in Crypto-Assets Act (MiCA) regulation, will gradually start to be enacted as early as this year. It is aimed at creating a full-fledged regulatory framework for the crypto market and ensuring investor protection. The European Securities Market Authority (ESMA) is appointed as the regulator of the industry.

The law affects a wide range of crypto market participants, including issuers of cryptocurrencies and stablecoins, crypto exchange operators, and custodial wallet providers, requiring them to disclose information and obtain a license.

Meanwhile, a license in one EU country will allow a company to provide services across the bloc. In addition, licensed financial institutions are also allowed to participate in cryptocurrency activities.

This week, the largest crypto exchange Binance said it would start restricting access to “unauthorized” stablecoins for users in the European Economic Area (EEA) from June 30 due to MiCA coming into force.

Binance CEO Richard Teng later clarified that the issue was not about delisting, but about restricting access to such assets in a number of the exchange’s products. He added that an update on regulated stablecoins would be provided at a later date.

In its announcement, the exchange did not mention the USDT stablecoin issued by Tether, which is the largest in the crypto market and is second only to bitcoin and Ethereum in terms of capitalization ($112,4 billion). And it is still unclear how MiCA will affect access to the asset.

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Back in March, one of the leading exchanges OKX announced the delisting of USDT in the EEA due to the adoption of MiCA. In turn, US crypto exchange Kraken, which is actively expanding its business in the EU, canceled its decision to delist USDT for European users in May.

Back in April, Ardoino noted that the company was discussing with the regulator its concerns about the risks to EU-regulated stablecoins. At the time, he criticized the idea of holding reserves in uninsured cash deposits that would simply disappear in the event of a bank failure. In his opinion, issuers of stablecoins should be able to keep 100% of their reserves in treasury bills.

In a new interview with The Block, Ardoino revealed that Tether has been actively involved in the MiCA standards consultation in recent months, but it remains concerned about several problematic requirements. “As with any regulatory framework of this scale, further discussions on the technical implementation standards are crucial to providing clarity to the market over certain provisions,” the senior executive added.