By Tether deliberately chose not to seek European Union authorization for USDT under the Markets in Crypto-Assets regulation because of its bank-deposit requirements, CEO Paolo Ardoino says, putting the stablecoin giant’s long-running objection back in focus as European central banks now push to change the rule.
Ardoino has repeatedly argued that complying with MiCA would make USDT less safe by forcing a large portion of its reserves away from highly liquid government securities and into commercial banks. He said Tether decided against applying because it did not want to expose its global users to that additional banking risk. The dispute centers on MiCA’s reserve requirements. Article 54 requires issuers of qualifying e-money tokens to keep at least 30% of funds received in separate accounts at credit institutions, with the remainder invested in secure, low-risk and highly liquid assets. More stringent requirements can apply to significant tokens, producing the 60% bank-deposit requirement at the center of Tether’s criticism.
Ardoino Says Bank Deposits Create Redemption Risk
Ardoino’s argument is that a bank deposit is not equivalent to immediately available cash. He has used the example of a hypothetical €10 billion stablecoin subject to the 60% requirement. That could require €6 billion to be deposited with banks. Those institutions can then use deposits to fund lending, meaning the stablecoin issuer could face liquidity or counterparty risk if large numbers of holders demand redemption during banking stress. Tether instead holds a substantial portion of USDT’s backing in short-term U.S. Treasury securities and other highly liquid assets. Ardoino has argued that directly holding Treasury bills gives Tether greater control over liquidity during large redemption events than placing most reserves with commercial banks.
The company’s position has carried commercial consequences in Europe. USDT has been removed or restricted by several regulated trading platforms seeking compliance with MiCA, while rival issuers have pursued European authorization. Tether has nevertheless maintained a presence in the region indirectly. In August 2025, it invested in Spanish crypto platform Bit2Me, which had obtained authorization from Spain’s CNMV as a MiCA crypto-asset service provider with passporting rights across the EU.
ECB Now Wants the Deposit Requirement Removed
The regulatory debate took an unexpected turn on September 22. The European Central Bank and EU national central banks have now recommended eliminating MiCA’s mandatory minimum bank-deposit requirement for stablecoin reserves, Reuters reported. Instead, they favor liquidity requirements under which issuers would hold sufficient assets capable of maturing within roughly one to five working days. Their concern partly mirrors Tether’s argument, although from a different perspective.
European central banks warn that requiring stablecoin issuers to place large reserves in commercial banks could replace relatively stable retail deposits with much larger and potentially volatile deposits from stablecoin companies. A sudden wave of stablecoin redemptions could then force those issuers to withdraw billions from banks quickly, potentially transmitting stress into the banking system. The ECB remains concerned about other aspects of global stablecoins, particularly arrangements where tokens issued inside and outside the EU are treated as interchangeable. It argues such multi-issuance structures can create redemption and financial-stability risks and has also repeatedly raised concerns about foreign-currency stablecoins weakening European monetary sovereignty.
The proposal does not mean MiCA’s reserve rule has already changed. The existing legal requirements remain in force unless European lawmakers amend the regulation. But the timing is significant for Tether. After years of arguing that MiCA’s bank-deposit requirement could create the very systemic risks regulators intended to prevent, Europe’s own central banks are now asking policymakers to reconsider that part of the framework. Whether that ultimately changes Tether’s decision not to seek MiCA authorization remains unresolved.