ECB And EU Central Banks Push To Replace MiCA’s Stablecoin Deposit Rules

The European Central Bank and EU central banks are calling for changes to how stablecoin issuers must hold their reserves, proposing liquidity based requirements instead of the current mandatory bank deposit thresholds.

Bank-Deposit Rule Seen As A Risk To Lenders

The European System of Central Banks wants to scrap MiCA’s requirement that stablecoin issuers hold at least 30% of reserves, or 60% for larger stablecoins, in bank deposits. The group argued this rule ties issuers too closely to banks and could strain lenders if a sudden stablecoin run forces an issuer to withdraw large deposits quickly.

New Liquidity Thresholds Proposed Instead

In its response to the European Commission’s review of the Markets in Crypto Assets Regulation, the ESCB backed replacing the deposit rule with minimum liquidity thresholds for reserve assets maturing within one and five working days. It suggested overnight reverse repos and short-term government bonds as suitable alternatives, referencing earlier European Banking Authority draft rules requiring significant stablecoins to hold 40% of reserves in one day assets and 60% within five days, with lower thresholds for smaller tokens.

The central banks also warned that MiCA faces enforcement challenges, noting that crypto firms failing to comply with the bloc’s licensing rules can still reach EU customers.