Why does Tether reject the European Union’s Stablecoin Regulation? Tether’s CEO stated that the company has not applied for a license under the EU’s MiCA regulation, primarily because MiCA requires major stablecoins to hold at least 60% of their reserves in European banks. CEO Paolo Ardoino argues that this requirement could expose USDT to additional risks. Currently, Tether holds the majority of its reserves in U.S. government bonds. If a large sum were transferred to a European bank and that bank failed, Tether might not recover the full amount. Deposit insurance covers only a tiny fraction of such a large sum. This is a real risk. A bank failure does not mean all deposits are lost, but there is no guarantee Tether would fully recover its funds after the resolution process. In summary, MiCA aims to ensure stablecoin reserves are readily available for users to redeem into fiat currency, but Tether believes requiring such a large portion to be held in banks introduces new risks. Because Tether has not sought MiCA licensing, EU-regulated exchanges have restricted or halted USDT trading.