Tether’s CEO called MiCA a threat to stablecoins and the banking system. Could MiCA really be such a threat? Or is this just a tempest in a teapot?
Stablecoins are digital money that must always be worth the same (for example, one token is worth one dollar). The companies that issue this digital money must have real money in the bank to guarantee its value.
There are new rules in Europe (MiCA) whereby companies that issue this digital money must keep most of their real money in European banks.
Paolo Ardoino believes that this could be dangerous. Here is his rationale in a nutshell:
1. If all the money is in European banks, and something happens to these banks, it could damage the entire digital money system. Don't put all your eggs in one basket.
2. There is insurance on bank deposits in Europe, but it is too small for the large amounts that companies issuing digital money hold.
3. In 2023, there was a case where the problems of one bank in the US led to temporary digital money problems. Ardoino is afraid that the new rules could lead to similar situations in Europe.
On the other hand, these new rules are designed to make the system safer and more transparent for ordinary people. They want to make sure the companies issuing digital money actually have real money to back them up.
So is Ardoino just panicking or does he have real reasons to be worried? The truth is most likely somewhere in the middle. He has reasons to be concerned, but his opinion may be exaggerated, as the new rules could make it more difficult for his company to operate.
Overall, the new rules aim to make the digital money system more reliable, but it’s important to strike the proper balance so as not to create new problems while trying to solve old ones. This requires all stakeholders – regulators, companies and experts – to continue to discuss the best ways to implement these rules.
Ardoino's position is not pure populism, as he raises some real issues, but his opinion should be considered in the context of his company's interests.