Tether CEO’s MiCA concerns, Buterin to ‘Purge’ Ethereum inefficiencies: Finance Redefined

2024-11-05 08:30:37 Primitive Reading

From cointelegraph by Zoltan Vardai

Concerns are mounting over the implications of Europe’s upcoming crypto regulatory bill. Despite being a significant step forward for the industry, the European framework poses significant banking risks for stablecoin issuers, Tether CEO Paolo Ardoino told Cointelegraph.

In the wider crypto space, Vitalik Buterin outlined his plan to reduce Ethereum’s data bloat and simplify the overall protocol as part of his plans called “The Purge,” aiming to create more efficiency in the world’s second-largest blockchain network.

EU MiCA rules pose “systemic” banking risks for stablecoins — Tether CEO

Europe’s forthcoming regulatory framework will introduce banking concerns for stablecoin issuers that could threaten the stability of the broader crypto space, according to Paulo Ardoino.

The Markets in Crypto-Assets Regulation (MiCA) is the first comprehensive regulatory framework for the crypto industry and is set to go into full effect on Dec. 30. Under MiCA, stablecoin issuers will be required to hold at least 60% of reserve assets in European banks.

Considering that banks can loan up to 90% of their reserves, this may introduce “systemic risks” for stablecoin issuers, according to Ardoino, CEO of Tether — the issuer of the world’s largest stablecoin, USDt USDT$0.999 which recently surpassed $120 billion in market capitalization.

Ardoino shared his concerns with Cointelegraph during an interview at Plan B Lugano in Switzerland:

“If you have 10 billion euros under management, you have to put 6 billion euros in cash deposits. That is 60% of 10 billion euros. We know that banks can lend out 90% of their balance sheet. So of the 6 billion euros, they lend out 5.4 billion euros to people […] 600 million euros will remain in the bank balance sheet.”

Tether’s Paolo Ardoino, interview with Cointelegraph’s Zoltan Vardai, clip 1. Source: YouTube

The “Purge” — Vitalik’s plan to reduce Ethereum’s bloat

Vitalik Buterin, co-founder of Ethereum, has released the fifth part of his blog series on the blockchain network’s future path titled “The Purge,” which aims to reduce data bloat and simplify Ethereum’s protocol.

The Purge focuses on trimming unnecessary data storage and eliminating outdated features to make Ethereum more efficient while preserving “the permanence” of the blockchain.

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