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ether CEO Paolo Ardoino has raised concerns over new European Union stablecoin regulations, warning they could push several banks in Europe toward failure. In a recent podcast interview, he outlined how current rules could trigger a crisis similar to what happened with Silicon Valley Bank in 2023.
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Speaking on the Less Noise More Signal podcast, Ardoino criticized the EU’s approach to stablecoin regulation. He said the requirement to hold 60% of stablecoin reserves in uninsured bank deposits is a setup that increases the chance of both stablecoin issuers and banks going under.
He broke down the risk using a basic example. “So remember, their regulation was pushing us to keep 60% of our reserves in uninsured cash deposits in Europe… Imagine that you have €10 billion in market cap of your stablecoin in Europe. 60% needs to be kept in uninsured cash deposits in a bank.”
He went on to explain how banks, operating on a fractional reserve model, would lend most of that money out. In the event of large redemptions, the bank would not have enough cash on hand to meet the demand, potentially causing both the bank and the stablecoin issuer to default.
“As a stablecoin issuer, you go bankrupt. Not because of you, but because of the bank. So the bank goes bankrupt and you go bankrupt,” he said.
Ardoino also argued that the regulation appears to benefit the banking system rather than the crypto market. According to him, larger banks in Europe are not willing to work with stablecoin projects, forcing companies to rely on smaller banks with higher risk profiles.
He believes this structural weakness could repeat past banking failures seen elsewhere. “Mark my words, as happened with Silicon Valley Bank, that, by the way, almost killed them in 2023, they will face the same issues. Banks will blow up in the next years also in Europe… Many banks will blow up in Europe in the next few years.”
Ardoino’s warning adds to a growing list of crypto industry voices calling for more practical and risk-aware regulatory approaches, especially as Europe’s MiCA (Markets in Crypto-Assets) framework continues to roll out.
The entire interview can be found below: