Stablecoin Reserve Rules
European Central Bank urges revision of MiCA stablecoin reserve rules to protect banks.
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The European Banking Authority’s 2024 draft rules already set specific liquidity benchmarks: significant stablecoins would need 40% of reserves maturing within one working day and 60% within five working days, while non-significant tokens would face 20% and 30% thresholds, respectively.
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The ESCB said the current deposit mandate “creates a direct link between issuers and credit institutions,” potentially transmitting the effects of a stablecoin run directly to commercial banks.
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The ECB and ESCB submitted their formal recommendation on Sept. 22 as part of the European Commission’s consultation on MiCA, arguing that the framework should shift from fixed deposit percentages to the speed at which reserve assets can be accessed.
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The affected MiCA categories include both e-money tokens (EMTs) and asset-referenced tokens (ARTs); the 30% floor applies to non-significant tokens, while the 60% requirement applies to tokens classified as significant because of their larger market footprint.
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The regulatory uncertainty has already been reflected in prediction-market sentiment around Ethereum, with reduced odds of the cryptocurrency reaching higher price levels by the end of 2026, according to Crypto Briefing.
The European Central Bank and national central banks are pushing the European Commission to scrap MiCA's stablecoin reserve rules. Current rules require stablecoin issuers to hold 30% of reserves in bank deposits, or 60% for major tokens. CryptoTicker reported that the ESCB argues this creates dangerous links between stablecoin firms and banks during market stress.
Instead, the ECB wants liquidity-based requirements. Reserves should be in assets that mature within one to five working days, like short-term sovereign bonds and reverse repos. The central banks also warned that enforcement gaps let noncompliant crypto firms still serve EU customers, raising investor-protection risks.
Bank Deposit Rule Poses Financial Stability Risk
The ESCB says the current 30% and 60% deposit mandate creates a direct link that could harm banks. CryptoTicker explains that during a stablecoin run, money flows out of these firm-bank connections rapidly. This replaces stable retail deposits with volatile funding sources. Banks then struggle to provide credit to households and businesses.
The ECB submitted its formal recommendation on September 22. CoinLaw reported that the central banks want to replace fixed deposit percentages with liquidity speed requirements. Non-significant stablecoins would need 20% of reserves maturing within one working day and 30% within five working days. Significant tokens face tougher thresholds: 40% in one day, 60% in five days.
Enforcement Gaps Allow Illegal Crypto Operations
The ESCB flagged a major compliance problem in its recommendation. Noncompliant crypto firms continue operating in the EU and serving customers illegally. CryptoTicker noted this creates serious investor-protection and market-integrity gaps. Regulators lack teeth to stop unauthorized stablecoin issuers from entering the market.
Central Banks Eye Broader Yield Restrictions
Beyond reserve rules, European central banks are considering wider restrictions. CryptoRank reported that the ESCB wants to extend MiCA's stablecoin interest ban to crypto lending, borrowing, and staking services. This would block users from earning returns on staked crypto or borrowed digital assets.
The regulatory uncertainty is already weighing on crypto markets. CryptoRank reported that Ethereum price expectations have fallen. Prediction markets show lower odds of Ethereum reaching higher levels by end of 2026. Investors are pricing in tighter EU rules as a headwind for crypto assets.
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