Odyssey Exchange
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Bullish
You’ve asked me to explain why MiCA regulation is BAD for stablecoins
I'll explain you why MiCA regulation is catastrophic for stablecoins.
MiCA demands 60% of stablecoin reserves to be held in EU banks.
Tether’s USDT is not MiCA compliant because it has US Treasuries as collateral, not EU reserves.
MiCA is designed to limit USD stablecoins and protect weak EURO stablecoins.
EU stablecoins lack liquid collateral such as bonds or assets like US Treasuries.
MiCA forces issuers to hold 60% of reserves in EU banks, where stablecoins are treated as liabilities.
Banks reinvest these reserves in low-risk assets like Euro bonds, which are less liquid that US Treasuries.
This rule increases risk for stablecoin issuers, with no benefit to EU banks - unless they issue stablecoins themselves.
MiCA ignores systemic risks of relying on fragile banks for stablecoin reserves.
Circle's USDC held 10% of reserves in Silicon Valley Bank.
When SVB collapsed in 2023, USDC’s peg fell to $0.80 due to $3 billion of trapped reserves.
SVB collapsed on a Friday, redemptions froze until Monday due to banking closures.
Coinbase also froze withdrawals, to see if US government would bail out SVB depositors.
This crisis proved one thing:
US Treasuries are safest collateral for stablecoins!
MiCA risks driving EURO stablecoins backward.
EU’s reliance on legacy banking creates systemic risks for stablecoins under MiCA.
Instead of innovation, MiCA forces issuers into fragile, outdated systems that increase risk for everyone.
You need to understand:
MiCA doesn’t add rules - it adds RISKS!
1. MiCA offers no benefit for EU stablecoins, which lack liquidity of US Treasuries.
2. MiCA drives USD stablecoins out of Europe, leaving the market fragmented.
3. MiCA forces reliance on legacy banks, which are prone to failure.
Stablecoins succeed with safe, liquid reserves like US Treasuries.
Not when they're trapped in risky, outdated banking systems.
What’s your view?
Will MiCA help Europe lead - or fall behind in crypto innovation?
👇 Let’s discuss in comments.
I'll explain you why MiCA regulation is catastrophic for stablecoins.
MiCA demands 60% of stablecoin reserves to be held in EU banks.
Tether’s USDT is not MiCA compliant because it has US Treasuries as collateral, not EU reserves.
MiCA is designed to limit USD stablecoins and protect weak EURO stablecoins.
EU stablecoins lack liquid collateral such as bonds or assets like US Treasuries.
MiCA forces issuers to hold 60% of reserves in EU banks, where stablecoins are treated as liabilities.
Banks reinvest these reserves in low-risk assets like Euro bonds, which are less liquid that US Treasuries.
This rule increases risk for stablecoin issuers, with no benefit to EU banks - unless they issue stablecoins themselves.
MiCA ignores systemic risks of relying on fragile banks for stablecoin reserves.
Circle's USDC held 10% of reserves in Silicon Valley Bank.
When SVB collapsed in 2023, USDC’s peg fell to $0.80 due to $3 billion of trapped reserves.
SVB collapsed on a Friday, redemptions froze until Monday due to banking closures.
Coinbase also froze withdrawals, to see if US government would bail out SVB depositors.
This crisis proved one thing:
US Treasuries are safest collateral for stablecoins!
MiCA risks driving EURO stablecoins backward.
EU’s reliance on legacy banking creates systemic risks for stablecoins under MiCA.
Instead of innovation, MiCA forces issuers into fragile, outdated systems that increase risk for everyone.
You need to understand:
MiCA doesn’t add rules - it adds RISKS!
1. MiCA offers no benefit for EU stablecoins, which lack liquidity of US Treasuries.
2. MiCA drives USD stablecoins out of Europe, leaving the market fragmented.
3. MiCA forces reliance on legacy banks, which are prone to failure.
Stablecoins succeed with safe, liquid reserves like US Treasuries.
Not when they're trapped in risky, outdated banking systems.
What’s your view?
Will MiCA help Europe lead - or fall behind in crypto innovation?
👇 Let’s discuss in comments.
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.
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