Ardoino points out that under MiCA, a large portion of the stablecoin issuers’ assets in banks in Europe will be converted into loans, which could put a large portion of the issuers’ reserves at risk in the event of a bankruptcy. For example, if Tether manages €10 billion, €6 billion of that would need to be held in banks. However, the fact that banks can distribute 90% of this amount as loans creates potential risks to the adequacy of stablecoin reserves.

Might interest you: What is BabyDoge?

Ardoino, on the other hand, states that under the MiCA framework, stablecoin issuers can protect themselves against the risk of bankruptcy. As a suggested solution, he emphasizes that reserves can be secured by purchasing securities such as treasury bonds or government bonds in addition to bank accounts.

You can join our Telegram channel to not miss the news and stay informed about the crypto world.

The post Tether CEO’s MiCA Statement appeared first on Coin Engineer.