Tether CEO Paolo Ardoino has issued a warning to the European financial system, warning that the intersection of dangerous lending and new cryptocurrency rules could lead to bank breakdowns collisions on the continent in the near future.
In an interview with the Less Less Noise More Signal Podcast, Ardoino targeted the European Union’s regulatory framework for Stablecoins.
In his scenario, it could mean holding 6 billion euros of robust, ridiculous stub coins for 10 billion euros with minimal protection in a small bank. “European banking insurance costs just 100,000 euros,” he said. “If you have 1 billion euros, it’s like venting fire.”
European banks, like all other banks, operate in fractional reserves, Ardoino added. “They can buy 90% of that and lend it to people who want to start a business.” In his hypothetical 6 billion euro scenario, this means that 5.4 billion euros will be loaned by the bank.
Tether CEO @Paoloardoino to @pahueg: “Many ‘European banks’ will “explode” in “the next few years.” pic.twitter.com/himwwyrbcu
– Josh Kaplan (@joshcapran) May 1, 2025
He likened the setup to bring about the collapse of Silicon Valley Bank in 2023. This exposed the discrepancy between deposits and actual liquidity, which floods of redemption. Ardoino warned that European banks operate under a similar fractional preliminary model that could be elucidated under pressure. He estimated that a 20% redemption event could cut banks by hundreds of millions.
“As a stubcoin issuer, you’re going to go bankrupt. It’s not because of you, it’s the bank. Banks will go bankrupt, it’s going to go bankrupt, the government will say, “Stubcoin is very dangerous.”
He added that European regulations are being created to help banks support the bloc’s banks and bring liquidity, which created “large systematic risks.” Like UBS, Europe’s biggest banks “not the stubcoin of the bank” promote the use of small banks to stubcoin issuers, promoting risk.
Comments recently raised stakes in Latin American producer Adecoagro as Tether is set to launch a US-based Stablecoin product and Stablecoin Issuer continues to invest in a variety of projects outside the ecosystem.