'Like Spitting on Fire': Tether CEO Slams EU Deposit Protections Amid Bank Failure Warnings
Paolo Ardoino has slammed EU regulations that could force stablecoin issuers to rely on untrustworthy banks and warned of possible bank failures in the future.
By Francisco Rodriguez | Edited by Aoyon Ashraf May 3, 2025, 3:35 PM
What you should know:
- Tether CEO Paolo Ardoino has expressed concern about possible bank failures in Europe due to risky lending and new cryptocurrency regulations in the region.
- Ardoino criticized EU regulations that require stablecoin issuers to keep a significant portion of their reserves in uninsured bank deposits, creating a potential liquidity risk.
- He drew an analogy with the collapse of Silicon Valley Bank in 2023.
Tether CEO Paolo Ardoino has sounded the alarm over Europe's financial system, warning of a possible wave of bank failures on the continent in the coming years due to the interplay of risky lending and new cryptocurrency regulations.
In an interview with the Less Noise More Signal podcast, Ardoino criticized the European Union's regulatory conditions for stablecoins, which he believes pushes companies like Tether to keep the majority of their reserves — up to 60% — in uninsured bank deposits.
In his mind, that could mean storing €6 billion of the €10 billion of the pegged stablecoin in small banks with limited protection. “Bank insurance in Europe is only €100,000,” he noted. “If you have €1 billion, it’s like spitting on a fire.”
European banks, like all others, operate on a fractional reserve basis, Ardoino added. “They can lend 90 percent of it to people who want to buy a house, start a business, and so on.” In his hypothetical €6 billion scenario, that would mean the bank would lend out €5.4 billion.
Tether CEO @paoloardoino @pahueg: “Many” European banks will “explode” in the “next few years”. pic.twitter.com/HimWWYrbcU
— Josh Caplan (@joshdcaplan) May 1, 2025
He compared the situation to the run-up to the collapse of Silicon Valley Bank in 2023, when a flood of redemptions exposed a mismatch between deposits and real liquidity. Ardoino warned that European banks operate similar fractional reserve models that could collapse under pressure. He predicted that a redemption event of 20% could leave banks without billions.
“As a stablecoin issuer, you can go bankrupt — not because of your actions, but because of the bank. And then the bank goes bankrupt, and you go bankrupt, and the authorities say, 'I told you, stablecoins are a serious threat,'” Ardoino said.
He added that regulation in Europe is designed to support banks in the bloc and provide them with liquidity, but this has created a “massive systemic risk.” Europe’s largest banks, such as UBS, “will not hold stablecoins,” forcing stablecoin issuers to turn to smaller banks, further increasing the risks.
The comments come as Tether plans to launch a stablecoin product
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