Bitgo warns MiCA could spark stablecoin crisis

Bitgo CEO Mike Belshe warned that Europe’s Markets in Crypto-Assets (MiCA) framework could create systemic risks for stablecoin issuers by forcing reserve assets into traditional banking institutions.

Belshe argued that the regulation links the stability of digital assets to the health of the banking sector, potentially exposing stablecoin reserves to the same risks faced by conventional depositors.

“That creates a direct link between cryptomarkets and traditional banking stress. When a bank wobbles, stablecoin reserves wobble with it,”

Said Bitgo CEO Mike Belshe.

Belshe highlighted that European Union deposit insurance is capped at €100,000 per depositor, claiming that stablecoin issuers holding billions of euros in reserves receive the same level of protection as retail savers.

“EU deposit insurance caps at €100K per depositor. A stablecoin issuer holding billions in reserves gets the same protection as a retail savings account. That’s not a rounding error — it’s a structural gap,”

Said Bitgo CEO Mike Belshe.

The comments referenced the collapse of Silicon Valley Bank in 2023, which temporarily affected the value of Circle’s USDC stablecoin after the company disclosed that $3.3 billion of its reserves were held at the failed institution.

While the U.S. Federal Reserve ultimately guaranteed all Silicon Valley Bank deposits and Circle later moved its funds to BNY Mellon, Belshe warned that Europe could face similar challenges if stablecoin regulations do not fully address the risks associated with bank failures.