EU Deposit Safeguards Useless in Crisis, Says Tether CEO: ‘It’s Like Spitting on a Fire’

Tether CEO Paolo Ardoino has taken a strong stance against the European Union’s latest stablecoin rules, warning that they could expose issuers to severe banking risks and even contribute to financial instability across Europe.

Speaking on the Less Noise More Signal podcast, Ardoino criticized the requirement for stablecoin issuers to hold up to 60% of their reserves in bank deposits — many of which would be uninsured. “If you’ve got a €10 billion stablecoin, you might have to park €6 billion in small banks,” he said. “But the deposit insurance only covers €100,000. That’s like spitting on a fire.”

He likened the setup to the conditions that led to the 2023 collapse of Silicon Valley Bank, where deposit-heavy lenders collapsed under pressure. In the EU’s case, a sudden redemption wave could wipe out banks that simply don’t have the reserves to meet withdrawals — leaving stablecoin issuers stuck in the middle.

“If €6 billion is deposited and €5.4 billion is loaned out under fractional banking, a 20% redemption event could cripple the system,” Ardoino explained. “And if your bank collapses, regulators will say it’s your fault. That’s the irony.”

He also criticized the limited number of large banks willing to serve crypto clients, saying major players like UBS won’t even touch stablecoin firms, pushing them into riskier banking relationships with smaller institutions.

“These rules aren’t really about safety,” Ardoino claimed. “They’re about using stablecoin reserves to prop up banks. But that creates systemic fragility instead.”

Tether, the issuer of the world’s largest stablecoin USDT, continues to expand its footprint beyond crypto. The company is preparing to launch a U.S.-based stablecoin and recently announced new investments in Latin American agriculture, including increased exposure to Adecoagro.