ECB and EU Central Banks Seek Stablecoin Reserve Rule Changes

The European Central Bank (ECB) and EU central banks are pushing for changes in the Markets in Crypto-Assets Regulation's (MiCA) rules regarding stablecoin reserves. The current requirement is that at least 30% of reserve assets be held as bank deposits, or 60% for significant stablecoins. However, the ECB and EU central banks argue that this could create liquidity risks for banks if a large number of stablecoin holders were to withdraw their deposits simultaneously.

Instead, they propose replacing these rules with minimum liquidity thresholds for reserve assets maturing within one and five working days. The European System of Central Banks (ESCB) also suggests using overnight reverse repurchase agreements (repos) or short-term sovereign bonds as alternative instruments for issuers to achieve liquidity.

The ESCB claims that the current requirement creates a direct link between issuers and credit institutions, which could expose banks to liquidity problems. They warn of 'material challenges' in enforcing MiCA, citing draft rules published by the European Banking Authority (EBA) in 2024, which would require significant stablecoins to hold at least 40% of reserves in assets maturing within one working day and 60% within five working days.