Europe's upcoming regulatory framework, the Markets in Crypto-Assets Regulation (MiCA), will pose banking challenges for stablecoin issuers. The new rules, effective from Dec. 30, will require stablecoin issuers to hold 60% of reserves in European banks, potentially introducing systemic risks. Tether's CEO, Paulo Ardoino, expressed concerns about the implications of this regulation, especially in light of past incidents where stablecoins lost their peg due to banking issues. The MiCA requirements could lead to a significant portion of reserves being held by banks, raising concerns about bankruptcy risks. Despite these challenges, Ardoino suggested that stablecoin issuers can mitigate risks through securities. The MiCA framework has also raised concerns among regulatory experts, who fear an exodus of companies from Europe. However, some financial institutions, like Societe Generale, are already preparing for MiCA compliance by launching euro-denominated stablecoins. Overall, the MiCA regulations are expected to have a profound impact on the stablecoin industry and European Web3 companies. Read more AI-generated news on: https://app.chaingpt.org/news