The chief executive officer of Tether, Paolo Ardoino, has expressed concern over the new legislation that the European Union has implemented for the Market for Crypto Assets (MiCA), stating that it may create systemic risk rather than providing stability.
The MiCA, which went into effect on June 30th, applies rigorous regulations to stablecoin activities that take place inside the European Economic Area. Stablecoins are required to have at least sixty percent of their reserves kept in bank accounts located inside the European Union.
According to Ardoino, this might put a pressure on financial institutions that are already operating under a paradigm of fractional reserve banking, which could possibly increase the risk to the system as a whole.
As a result of the inadequate insurance coverage of cash deposits in the EU, which is capped at $100,000, he attacked MiCA for not strengthening the security of the financial system but rather contributing to its fragility. This was particularly noticeable in light of the fact that MiCA was mentioned.
Additionally, Ardoino is of the opinion that this may put the stability of significant stablecoin issuers like as Tether in jeopardy.
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