Circle CEO: MiCA law requires EU stablecoin issuers to reserve 30-60% cash, which is worrying

This site (120bTC.coM): The crypto asset market law "MiCA" proposed by the EU in 2019 has officially entered into force on June 30, making the EU a jurisdiction with tailor-made and comprehensive cryptocurrency regulations The district has taken an important step.

Circle CEO: EU stablecoin reserve regulations are worrying

However, Jeremy Allaire, CEO of stablecoin issuer Circle, which announced earlier this month that its stablecoins USDC and EURC have obtained the MiCA issuance license, recently announced at When interviewed, Brussels pointed out that the provisions of the "MiCA" bill regarding stable currency reserves are worrying.

Jeremy said that "MiCA" requires issuers of stablecoins linked to fiat to hold at least 30% of cash reserves in multiple EU bank accounts, and some even reach 60%. In this regard, Patrick Hansen, Circle’s head of EU strategy and policy, said: Bank deposits will bring credit risks and counterparty risks.

Jeremy also added: It is indeed very difficult for our industry to establish a stable relationship with banks.

Circle stated that they have reported this issue to the relevant authorities. After all, the reason for the previous significant decoupling of USDC was due to the collapse of Silicon Valley Bank. Some experts also said that the EU may propose a solution to this problem when updating the "MiCA" bill in the future and try to respect the principles of decentralized finance.

However, another major reason that Circle did not mention may be related to his interests or losses. We know that the biggest source of profit for stablecoin issuers like Circle or Tether is to use their reserves to buy U.S. bonds, and they can make a lot of money from the interest alone. If it has to be turned into cash and stored in the bank in the future, a lot of potential revenue will be lost.

Why has Tether not been regulated in the EU?

Since Circle announced that it has obtained an issuance license in the EU, its biggest competitor and USDT issuer Tether has not only failed to obtain legal operating qualifications in the EU, but its US dollar stablecoin and euro stablecoin have also been subject to multiple attacks this year. Delisted from all exchanges.

In this regard, Tether CEO Paolo Ardoino hinted in April this year that Tether has been actively participating in the EU's "MiCA" regulatory technical standards discussion, but is still worried that the bill will contain some problematic requirements: These requirements will not only This makes the job of stablecoin issuers extremely complex and would also make EU-licensed stablecoins extremely vulnerable and operationally risky.

Now it seems that placing a large amount of cash in EU banks may also be a major reason for slowing down the progress of Tether.

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