Compilation | Wu Talks Blockchain
Paolo Ardoino, CEO of Tether, discussed the recent turmoil in global markets in a Cointelegraph podcast and explained how Tether provides protection for the global middle class. He also criticized the MiCA regulations for stablecoins and shared his thoughts on Trump’s plan to create a Bitcoin reserve in the United States.
Does Tether’s success mean the failure of this country’s economy?
Yeah, I might phrase it a slightly different way. While the basic mechanism is the same, the success of USDT is actually a symptom of the economic success of many countries. It's not our fault. I think, thank God for USDT, because as I said before, it's helped hundreds of millions of people escape from systems that are failing. These systems are failing because the governments and central banks of these countries have been printing too much money out of thin air for too long. You can look at what's happening in Japan, where the stock market is collapsing and the yen is not in a good shape. They're doing everything they can to protect it, but at some point it's going to fail. Many countries, many governments, and central banks are facing failure. So ultimately, it's a little sad. While companies have to make money, you might want to make a little less money and see more central bank decision makers be a little smarter and protect the people of their countries better.
How does MiCA regulation affect Tether?
First, there is a little bit of a misunderstanding. I think USDT can still be traded on platforms like OKX and Binance. The problem with the restrictions imposed by MiCA is that there are two types of restrictions. One is to reduce or limit the issuance and circulation of stablecoins, and these restrictions make the system safer, and we have no problem with this. But there is another type of restriction, which is the restrictions on reserves. You might think that restrictions on reserves should make stablecoins safer. In fact, the problem I and we (Tether) have is that these restrictions require that 60% of the reserves of stablecoins like USDT must be kept in cash in banks.
The problem is that cash deposits in Europe are not insured for amounts above €100,000. If you are a stablecoin company that manages €10 billion but can only insure €100,000 in deposits, that creates a big problem. We can look at what happened during the Silicon Valley Bank incident in 2023. Our main competitor had $3.3 billion in cash deposits with Silicon Valley Bank. We all know what happened when Silicon Valley Bank collapsed, and our main competitor almost collapsed. So, I think we have a good example of why this is a terrible idea. If the bank goes bankrupt because it can't fulfill your withdrawal request, it's actually a bank run, and as a stablecoin company, you will also go bankrupt because the bank you rely on is not doing fractional reserves. So, my concern with MiCA is that instead of making the system safer, it creates a huge systemic risk for stablecoins and the underlying banking system.
Additionally, our major competitors have expressed similar concerns in recent weeks, so now there are multiple companies expressing the same concerns.
Do you believe in Trump's plan to build up a US Bitcoin reserve?
I think that central banks in general, and especially in Asia, have been buying more and more gold in recent months. Bitcoin is far superior to gold, even though it's not widely understood. Gold has a 7,000-year history, so it has an edge in people's minds as the perfect store of value. But Bitcoin is actually far superior to gold. So if a country holds Bitcoin as part of its national reserves, especially if it continues to buy Bitcoin and not sell it, that would be a very smart move, and many other countries would follow suit.
The beauty of Bitcoin is that it's the only currency that's completely controlled by mathematics. It's not about trusting a person or an institution, it's about trusting mathematics. And mathematics is the only objective thing we have in this universe. So if a country, especially a powerful country like the United States, uses a currency backed by mathematics, it sends a huge signal to the rest of the world. I'm very bullish on this.
As for Tether, part of our company's reserves are also held in Bitcoin, and we convert part of our profits into Bitcoin. So if this strategy is proven to be correct, it will prove that our strategy all along is correct.