ECB Backs Extension of Stablecoin Yield Ban to Cover Lending and Staking

The European Central Bank and national central banks across the EU have called for an extension of MiCA's stablecoin yield ban to cover lending, borrowing, staking, and other arrangements that can generate indirect returns for token holders.

This move aims to prevent crypto platforms from structuring products outside of MiCA regulations, effectively turning stablecoin holdings into yield-bearing arrangements. The central banks argue that such arrangements could weaken the regulatory distinction between electronic money and bank deposits while creating unequal conditions between crypto companies and regulated financial institutions.

The proposal would retain the existing prohibition on CASPs paying remuneration on stablecoins but extend it to indirect forms of remuneration, ensuring that issuers cannot bypass regulations by placing stablecoins inside lending or staking products. The ESCB also proposed replacing MiCA's minimum bank deposit requirements with reserve rules based on one to five day liquidity.