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Tether CEO Paolo Ardoino has explained why the company chose not to apply for a license under the European Union’s Markets in Crypto-Assets (MiCA) framework. According to Ardoino, the regulation creates unnecessary risks for stablecoin issuers instead of making the market safer.
He said MiCA requires issuers to keep 60% of their reserves as uninsured cash deposits in European banks. Ardoino argued that such a rule could expose stablecoin issuers to banking risks during periods of heavy redemptions.
Tether’s decision means $USDT, now valued at roughly $186 billion, has no MiCA authorization and can no longer trade on regulated crypto exchanges across the European Union.
Ardoino Points to Reserve Requirements
Ardoino’s biggest criticism focuses on MiCA’s reserve rules. He said a stablecoin issuer managing €10 billion ($11.38 billion) in reserves would have to place €6 billion ($6.83 billion) in uninsured bank deposits across European banks. According to him, many large banks are unwilling to work with stablecoin issuers, leaving smaller banks to hold those funds.
He argued that these banks operate on fractional reserve banking, meaning only part of customer deposits remains available as cash.
In his example, if users redeemed 20% of a €10 billion stablecoin supply, equal to €2 billion ($2.27 billion), banks might have only about €600 million ($683 million) immediately available. Ardoino warned that such a situation could trigger failures for both the banks and the stablecoin issuer.
Calling the legislation “poorly considered,” Ardoino said Tether skipped MiCA to protect its more than 400 million users rather than expose reserves to what he views as greater systemic risk.
Europe Moves Ahead Without $USDT
While Tether stayed outside the licensing process, Circle secured an Electronic Money Institution (EMI) license in France, allowing both $USDC and EURC to operate across all 27 EU member states under MiCA.
As regulated exchanges removed $USDT, $USDC became the primary dollar-backed stablecoin available on licensed European trading platforms.
The transition happened over several months. Coinbase Europe removed $USDT in December 2024, Crypto.com followed in January 2025, Binance restricted European $USDT trading pairs in March 2025, and Kraken eventually ended support after first limiting the token to sell-only trading.
Market makers have also started rebuilding liquidity around $USDC as regulated venues adjust to the new rules.
Tether Focuses on Global Markets
Ardoino said Europe is not Tether’s primary market. He noted that the company serves more than 400 million users, many of them in countries such as Turkey, Argentina, and across Africa, where access to dollar-backed assets is often more important because local currencies lose value.
Tether’s reserve strategy also differs from MiCA’s requirements. The company continues to back $USDT primarily with US Treasury securities and other globally diversified assets rather than large cash deposits in European banks.
Although $USDT has left regulated European exchanges, Tether has not completely stepped away from the region.
Companies including StablR and Oobit have launched MiCA-compliant stablecoins, EURR and USDR, using Tether’s Hadron tokenization platform, allowing the company to maintain technology partnerships in Europe without issuing a MiCA-approved stablecoin.
Related: CZ Says Politics, Not Compliance, Played a Role in Binance’s MiCA Application Withdrawal