ECB to Brussels: Scrap the MiCA Rule Tether Already Refused

The European Central Bank and 27 national central banks just asked Brussels to delete a MiCA provision that would force large stablecoin issuers to hold 60% of their reserves in commercial bank deposits. The request landed inside the European Commission's review of MiCA, the bloc's crypto rulebook.

Tether already answered that question. The company walked away from an EU license rather than accept the clause, and it's still the largest stablecoin issuer on the planet. So Europe's supervisors spent two years drafting a rule, watched the biggest player in the market refuse it, and now want it gone.

Here's what matters: the clause was meant to make stablecoins safer. Park 60% of a token's backing inside regulated banks and you get deposit insurance, supervision, the whole package. But that cuts both ways. Concentrating tens of billions of dollars inside commercial banks ties a stablecoin's fate to bank credit risk. Ask anyone who held USDC in March 2023, when Circle's reserves sat at Silicon Valley Bank and the token broke its peg for three days.

So which is it? Are bank deposits the safe asset here, or the fragile one? You can't argue both and expect the market to keep taking it seriously.

The numbers tell the story. Tether's USDT runs roughly $180 billion in circulation and keeps the bulk of its reserves in US Treasuries, not bank accounts. That structure held through every bank failure of the past three years.

The reality is Tether already voted with its feet, and the ECB just agreed with the vote. There's a second motive in play too, and it's less about safety. Kill the 60% requirement and euro-denominated stablecoins can compete on reserve quality instead of being boxed into a structure only a handful of European banks can support.

Watch whether the Commission actually strikes the clause in its next draft. If it does, Tether's EU calculus changes overnight, and the licensing map for dollar stablecoins in Europe gets redrawn.