Tether CEO: European Union's stablecoin regulatory framework may trigger a wave of local bank failures

In an interview with the Less Noise More Signal podcast, Tether CEO Paolo Ardoino criticized the European Union's stablecoin regulatory framework, which forces stablecoin companies such as Tether to keep most of their reserves (up to 60%) in uninsured bank deposits. Due to the cross-effects of risky loans and new cryptocurrency rules, there may be a wave of bank failures in Europe in the near future. Paolo Ardoino added that the European regulatory regime is designed to help banking institutions in the euro area to bring more liquidity, but this creates "huge systemic risk" because large European banks such as UBS will not include stablecoins in the banking system, ultimately forcing stablecoin issuers to choose smaller banks, thus further exacerbating the risk.