Tether abandons EU MiCA license over 60% bank-deposit reserve rule

Tether has abandoned plans to seek an EU license, CEO Paolo Ardoino said, citing a Markets in Crypto-Assets Regulation (MiCA) rule requiring major stablecoin issuers to hold 60% of reserves in bank deposits. The European Central Bank and several EU central banks have separately raised concerns about the same provision.

Tether rejects EU license over reserve requirements

Ardoino said Tether decided not to pursue an EU license because of MiCA rules requiring major stablecoin issuers to hold at least 60% of their reserves in bank deposits.

The requirement has become a significant point of discussion around the regulation because it directly affects how stablecoin companies structure and manage the assets backing their tokens. For Tether, the rule represents a departure from its existing approach to reserve management and has influenced its decision to remain outside the EU licensing framework.

MiCA was introduced to establish a common regulatory framework for crypto-asset services and stablecoin issuers across the European Union. The regulation sets requirements covering the issuance, operation and reserve management of crypto assets, with specific obligations applying to stablecoins.

Tether’s decision means the company will not pursue the EU license under the conditions currently associated with the regulatory framework. The move also highlights the continuing tension between regulatory requirements designed to strengthen financial safeguards and the reserve-management models preferred by major stablecoin issuers.

ECB concerns put 60% rule under scrutiny

The decision comes at a notable moment for the EU license debate. The European Central Bank and other EU central banks have voiced objections to the provision requiring major stablecoin issuers to keep 60% of their reserves in bank deposits.

Their concerns have brought renewed attention to the potential effects of the requirement on both stablecoin issuers and the wider financial system.

The bank-deposit requirement is intended to form part of the safeguards surrounding stablecoin reserves. However, requiring a substantial proportion of reserves to remain in bank deposits can affect how issuers maintain liquidity and manage their assets.

For stablecoin companies, reserve composition is closely connected to their ability to meet redemption demands and maintain confidence in their tokens. As a result, rules governing where and how reserves can be held can have broader implications for the business models of issuers operating across different jurisdictions.

The ECB and EU central banks’ objections have therefore reignited debate over whether the existing framework strikes the appropriate balance between regulatory oversight, reserve safety and the operational requirements of stablecoin issuers.

MiCA rules reshape the European stablecoin market

The controversy surrounding Tether’s EU license plans comes as MiCA continues to shape the European crypto market.

The regulation is intended to provide consistent rules for crypto businesses across EU member states, replacing a fragmented regulatory environment with a common framework. Stablecoin issuers are subject to specific requirements concerning the assets supporting their tokens and how those reserves are managed.

For companies such as Tether, compliance with those requirements can affect the way their operations are structured within Europe.

The 60% reserve provision is particularly important because it requires major stablecoin issuers to allocate a significant portion of their backing to bank deposits. That requirement has implications for liquidity management, reserve allocation and relationships with financial institutions.

Tether’s refusal to pursue an EU license demonstrates how regulatory conditions can influence the strategic decisions of major crypto companies. Rather than modify its reserve-management approach to meet the current requirements, the company has chosen not to seek authorization under the framework.

At the same time, the objections raised by European central banks have added another dimension to the discussion. Their concerns indicate that questions surrounding the reserve requirement are not limited to individual crypto companies but also involve broader considerations about the structure of the financial system.

Tether decision puts regulatory balance back in focus

Tether’s decision to abandon its EU license plans has once again placed the relationship between stablecoin regulation and reserve management at the center of the European crypto debate.

The company’s position is that the conditions surrounding the EU license would have a direct impact on how it manages the reserves supporting its stablecoin operations. The European regulatory framework, meanwhile, seeks to establish safeguards for users and financial markets through clearly defined reserve requirements.

The disagreement illustrates a wider challenge facing regulators as stablecoins become increasingly integrated into the digital-asset market. Regulators must establish rules that address potential risks while issuers must determine whether those requirements can be incorporated into their operating models.

For Tether, the current answer is to forgo the EU license rather than comply with the 60% bank-deposit requirement. For European regulators, however, the debate may not be settled.

The objections from the ECB and other EU central banks have reopened discussion over the provision itself, raising questions about whether the current reserve structure should remain unchanged.

For now, Tether’s position remains clear: the company has abandoned its plan to seek an EU license under the existing conditions. The development leaves the company’s European regulatory strategy closely tied to how the debate over MiCA’s reserve requirements develops.

The dispute ultimately puts the EU license framework at the intersection of two competing priorities: stronger regulatory safeguards for the stablecoin market and flexibility for issuers to manage their reserves according to their operating models.