Concerns are mounting over the implications of Europe’s upcoming crypto regulatory bill. Despite being a significant step forward for the industry, the European framework poses significant banking risks for stablecoin issuers, Tether CEO Paolo Ardoino told Cointelegraph.
In the wider crypto space, Vitalik Buterin outlined his plan to reduce Ethereum’s data bloat and simplify the overall protocol as part of his plans called “The Purge,” aiming to create more efficiency in the world’s second-largest blockchain network.
EU MiCA rules pose “systemic” banking risks for stablecoins — Tether CEO
Europe’s forthcoming regulatory framework will introduce banking concerns for stablecoin issuers that could threaten the stability of the broader crypto space, according to Paulo Ardoino.
The Markets in Crypto-Assets Regulation (MiCA) is the first comprehensive regulatory framework for the crypto industry and is set to go into full effect on Dec. 30. Under MiCA, stablecoin issuers will be required to hold at least 60% of reserve assets in European banks.
Considering that banks can loan up to 90% of their reserves, this may introduce “systemic risks” for stablecoin issuers, according to Ardoino, CEO of Tether — the issuer of the world’s largest stablecoin, USDt (USDT), which recently surpassed $120 billion in market capitalization.
Ardoino shared his concerns with Cointelegraph during an interview at Plan B Lugano in Switzerland:
“If you have 10 billion euros under management, you have to put 6 billion euros in cash deposits. That is 60% of 10 billion euros. We know that banks can lend out 90% of their balance sheet. So of the 6 billion euros, they lend out 5.4 billion euros to people […] 600 million euros will remain in the bank balance sheet.”
Tether’s Paolo Ardoino, interview with Cointelegraph’s Zoltan Vardai, clip 1. Source: YouTube
The “Purge” — Vitalik’s plan to reduce Ethereum’s bloat
Vitalik Buterin, co-founder of Ethereum, has released the fifth part of his blog series on the blockchain network’s future path titled “The Purge,” which aims to reduce data bloat and simplify Ethereum’s protocol.
The Purge focuses on trimming unnecessary data storage and eliminating outdated features to make Ethereum more efficient while preserving “the permanence” of the blockchain.
The Purge is not set to directly impact Ethereum’s gas fees. However, the proposed changes may enhance network performance and reduce operating costs.
Radiant Capital $58 million hack an expensive “lesson” for DeFi
Radiant Capital resumed its Ethereum lending markets after a hack that cost about $58 million in digital assets.
On Nov. 1, the lending protocol said it had implemented improvements, including transferring ownership into a timelock contract. The Radiant Capital team said this enforces a mandatory 72-hour waiting period for any adjustments, fortifying Radiant’s security.
The team also implemented an emergency admin role using a multisignature structure. The role is tasked with pausing and unpausing the lending protocol’s markets as necessary.
Crypto surges in Eastern Europe: DeFi drives 33% of transactions
Decentralized finance-related activity is increasing in Eastern Europe, showcasing continued cryptocurrency adoption, according to the onchain analytics platform Chainalysis.
Eastern Europe received over $499 billion worth of cryptocurrency between July 2023 and June 2024.
Decentralized finance (DeFi) activity accounted for a third of the region’s crypto value flow, totaling more than $165 billion, according to the Oct. 30 Chainalysis crypto adoption report.
Solana flips Ethereum in daily fees, surpasses $2.5 million in 24 hours
Solana has surpassed Ethereum in daily network fee generation, indicating growing user activity on the world’s third-largest blockchain.
Solana generated over $2.54 million worth of fees in 24 hours, surpassing Ethereum’s $2.07 million on Oct. 28 — making Solana the fifth-largest fee-generating protocol in the crypto space, according to DefiLlama data.
Solana’s soaring fees are correlated with growing trading activity on its leading decentralized exchange (DEX), Raydium, which generated over $3.41 million worth of fees on the Solana blockchain in 24 hours.
DeFi market overview
According to data from Cointelegraph Markets Pro and TradingView, most of the 100 largest cryptocurrencies by market capitalization ended the week in the red.
Of the top 100, the Celestia (TIA) token fell over 19% as the week’s biggest loser, followed by the Immutable (IMX) token down 19% over the past week.
Total value locked in DeFi. Source: DefiLlama
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.