Staff Reporter
Tether CEO Paolo Ardoino has issued a serious warning regarding the state of Europe’s financial system, predicting that “many” banks on the continent may face catastrophic collapses in the coming years.
In a recent interview on the Less Noise More Signal podcast, Ardoino pointed to stringent regulations and risky banking practices as potential triggers for widespread failures, drawing comparisons to the collapse of Silicon Valley Bank in 2023.
Ardoino’s concerns focus on the European Union’s regulatory framework for stablecoin issuers, which he believes increases systemic risks rather than reducing them.
“The regulation requires us to keep 60% of our reserves in uninsured cash deposits in Europe,” Ardoino explained to host Pascal Hügli. He described a scenario where stablecoin issuers are compelled to hold billions in vulnerable bank accounts.
“Imagine you have a market cap of 10 billion euros for your stablecoin in Europe. Then, 60% must be kept in uninsured cash deposits at a bank. In Europe, bank insurance only covers up to 100,000 euros. For 10 billion, that’s like throwing a drop of water on a fire.”
The situation, as Ardoino outlined, is dire. With 60% of a stablecoin’s reserves—amounting to 6 billion euros in his example—held in uninsured deposits, banks’ fractional reserve practices heighten the risk.
“They can lend out 90% of it to individuals wanting to buy homes or start businesses,” he noted. “So, 5.4 billion euros will be lent out, leaving just 600 million euros available.” If there were a 20% demand for redemptions, or 2 billion euros, Ardoino warned that banks would not have enough cash on hand.
“You go to the bank and say, ‘I want 2 billion euros,’ and the bank replies, ‘We only have 600 million euros.’”
Ardoino predicts that the fallout would be devastating for stablecoin issuers. “As a stablecoin issuer, you could go bankrupt—not due to your own actions, but because of the bank’s failure,” he said. “So the bank collapses, and then it’s, ‘See? Stablecoins are dangerous,’ according to the government.”
His critique extends to the broader European banking landscape, which he argues is unprepared to accommodate stablecoin operations. Major institutions like UBS, labeled as “systemic risk banks,” are reluctant to work with stablecoin issuers, forcing companies like Tether to depend on smaller, less stable banks.
“They have to use very small banks,” Ardoino cautioned. “Mark my words: like what happened with Silicon Valley Bank, which almost collapsed in 2023, these smaller institutions will face similar challenges.”
“Four banks failed in the U.S. in the past two years,” he added. “Many banks will blow up in Europe in the next few years.”
Ardoino’s remarks come as Tether prepares to launch a stablecoin product in the U.S. later this year. “We are simply bringing what we believe to be the best product the United States has ever created—the U.S. dollar,” he stated in an interview with CNBC.
As of April 25, Tether’s USDt remains the leading stablecoin, capturing a remarkable 66% of the market, according to Cointelegraph. With a market capitalization around $150 billion, per CoinGecko, USDt plays a crucial role in the crypto ecosystem.
The Department of the Treasury’s Q1 2025 report anticipates a bright future for USD-pegged stablecoins, projecting their combined market cap to reach $2 trillion by 2028, indicating a significant shift in digital finance, as noted by crypto-focused news sources.
