The CEO of Tether, Paolo Ardoino, sounds the alarm in the financial system of Europe, warning that a wave of bank failures could affect the continent in the near future due to the intersection of risky loans and new cryptocurrency rules.
Ardoino, during an interview with the Podcast Less Rideo More Signal, pointed to the regulatory framework of the European Union for Stablcoins, who said he pushes companies like Tether to maintain most of his reservations, up to 60%, in bank deposits without insurance.
In its scenario, that could mean having 6 billion euros of 10 billion euros stablecoin in small banks with minimal protection. “Banking insurance in Europe is only 100,000 euros,” he said. “If you have one billion euros, it’s like spitting in a fire.”
European banks, like any other bank, operate in a fractional reserve, Ardoino added. “They can lend 90% to people who want to buy a house, start a business and all that.” In its hypothetical scenario of 6 billion euros, this would mean that the bank will provide 5.4 billion euros.
He compared the configuration with the collapse of Silicon Valley Bank in 2023, when an avalanche of refunds exposed the mismatch between the deposits and the real liquidity. Ardoino warned that European banks operate under similar fractional reserve models that could unravel under pressure. He estimated that a 20% redemption event could leave short banks billions.
“As a stablcoin issuer, you declare bankruptcy, not for you, but for the bank. Therefore, the bank declares bankruptcy and bankrupt, and the government would say:” He told you that the stable are very dangerous, “said Ardoino.
Regulations are made in Europe to try to help banks in the block and bring them liquidity, but this created “enormous systemic risk.” The largest banks in Europe, such as UBS, “would not bank the stable”, pushing Stablecoin emitters to use smaller banks, promoting the risk.
The comments occur when Tether plans to launch a stablecoin product based in the US.
