ECB Seeks Maturity-Based Liquidity Requirements for Stablecoin Reserves

The European Central Bank and the EU's national central banks have submitted a recommendation to regulators to change the reserve structure for stablecoins under the Markets in Crypto-Assets (MiCA) framework.

Currently, MiCA requires regular stablecoin issuers to hold at least 30% of their reserves in commercial bank deposits. For significant stablecoins, this requirement rises to 60%. However, large redemptions could transmit stress from stablecoins to commercial lenders, according to the European Central Bank.

Tether CEO Paolo Ardoino warned about the same reserve structure back in 2024, arguing that it could expose stablecoin holders to failures at commercial banks. In a hypothetical scenario, he illustrated how a bank could become insolvent if a large number of customers redeem their tokens simultaneously, taking out more than the required amount of deposits.

The European System of Central Banks has now recommended replacing the 30% and 60% bank-deposit floors with maturity-based liquidity requirements. This would mean that stablecoin issuers would need to hold minimum proportions of reserve assets maturing within one working day and five working days, rather than a fixed share in commercial bank deposits.