Central banks seek to scrap the 60% deposit mandate for stablecoin issuers, citing systemic banking risks and potential regulatory alignment that could facilitate Tether's entry into the EU market.
ECB's proposal to remove the 60% deposit floor could allow Tether to obtain an EU license and expand its market.
Circle's backing of a rule change that could bring Tether back into the EU market increases competitive pressure on USDC.
Revolut dropped USDT for Europe to comply with MiCA, a regulatory alignment move with limited direct impact.
The European System of Central Banks has requested the removal of a MiCA rule requiring stablecoin issuers to hold 60% of reserves in commercial banks. Regulators argue that volatile token redemptions pose liquidity risks to lenders, while the proposal could potentially pave the way for Tether to seek an EU license.
The ECB argues that stablecoin reserves are not stable deposit money and that large, sudden redemptions could drain liquidity from commercial banks, posing a systemic risk to the banking sector.
Tether previously avoided seeking an EU license because it viewed the 60% deposit floor as a safety risk; removing this requirement could make the EU market more viable for the issuer.