(Zero Hedge)—Tether CEO Paolo Ardoino has issued a dire warning to about Europe’s financial system, predicting that “many” of the continent’s banks are at risk of catastrophic collapse.
In an interview with the Less Noise More Signal podcast, Ardoino highlighted how stringent regulations and risky banking practices could precipitate a wave of failures, drawing parallels to the collapse of Silicon Valley Bank in 2023.
Ardoino’s concerns center on the European Union’s regulatory framework for stablecoin issuers, which he argues exacerbates systemic risks rather than mitigating them. “The regulation was pushing us to keep 60% of our reserves in uninsured cash deposits in Europe,” the Tether CEO told host Pascal Hügli, describing a scenario where stablecoin issuers are forced to park billions in vulnerable bank accounts. “Imagine that you have 10 billion euros in market cap of your stablecoin in Europe. Then 60% needs to be kept in uninsured cash deposits in a bank. Uninsured cash deposit means that the bank insurance in Europe is only 100,000 euros. If you have 10 billion, 100,000 euros is like a spitting on a fire.”
Tether CEO @paoloardoino to @pahueg: “Many” European banks will “blow up” in the “next few years.” pic.twitter.com/HimWWYrbcU
— Josh Caplan (@joshdcaplan) May 1, 2025
The math, as Ardoino laid out, is grim. With 60% of a stablecoin’s reserves—equivalent to 6 billion euros in his example—held in uninsured deposits, banks’ fractional reserve practices amplify the risk. “They can lend out 90% of it to people that want to buy a house, that want to start a business, and all that,” he explained. “So 5.4 billion euros will be lent out by the bank and 600 million euros will be cut.” In the event of a 20% redemption demand, or 2 billion euros, Ardoino warned that banks would fall short of cash. “You go to the bank and you tell the bank, well, I want 2 billion euros. And the bank says, well, I only have 600 million euros.”
Ardoino predicts that the fallout would be catastrophic for stablecoin issuers. “As a stablecoin issuer, you go bankrupt. Not because of you, because of the bank,” the Tether CEO said. “So the bank goes bankrupt and you go—like, so is—I mean, and—and, oh, sure, the government will say, ah, told you so, stable coins are very dangerous.”
Ardoino’s critique extends to the broader European banking ecosystem, which he believes is ill-equipped to handle stablecoin operations. Major institutions like UBS, which he described as “systemic risk banks,” refuse to work with stablecoin issuers, forcing companies like Tether to rely on smaller, less stable financial institutions. “They need to use very small banks,” he said, warning that these institutions are particularly vulnerable. “Mark my words, as happened with Silicon Valley Bank that, by the way, almost killed them in 2033, they will face the same issues.”
“Four banks blew up last—in the last two years in the US,” he added. “Many banks will blow up in Europe in the many years—in the next few years.”
Ardoino’s comments come as Tether plans to launch a stablecoin product in the U.S. as soon as this year.
“We are just exporters of what we believe to be the best product the United States ever created — that is, the US dollar,” the Tether CEO said in an interview with CNBC.
As of April 25, Tether’s USDt solidifies its position as the leading stablecoin, securing a commanding 66% of the market, according to Cointelegraph. With a market capitalization hovering around $150 billion, per CoinGecko, USDt underscores its pivotal role in the crypto ecosystem. The Department of the Treasury’s Q1 2025 report projects a robust future for USD-pegged stablecoins, anticipating their combined market cap to soar to $2 trillion by 2028, signaling a transformative shift in digital finance, per the crypto-focus news outlet.
