ECB Pushes for Stricter Crypto Rules, Stablecoin Ban
The European Central Bank (ECB) has submitted a formal response to the European Commission's review of the Markets in Crypto-Assets Regulation, calling for stricter rules on cryptocurrencies. The ECB wants to retain the existing ban on interest payments for stablecoins and introduce new liquidity-based reserve requirements.
The bank also proposes centralized EU-level supervision for the largest crypto firms operating in the bloc, citing 'material challenges' in enforcement. The ECB notes that some crypto companies are not fully compliant with existing rules, and enhanced supervisory powers and stricter oversight are needed to address this issue.
The proposed reserve requirements would replace the current model, where stablecoin issuers hold between 30% and 60% of assets in bank deposits. Instead, a defined share of reserve assets must mature within one to five working days, making them more immediately accessible in a stress scenario.
This move aims to reduce the risk that a sudden wave of redemptions could trigger contagion into the broader financial system. The ECB also wants new powers to curb the spread of tokens pegged to non-euro currencies if they pose systemic risks to eurozone financial stability.