ECB Seeks Stablecoin Rule Overhaul Amid Market Volatility Fears
The European Central Bank (ECB) and all 27 EU national central banks are pushing for changes to Europe's stablecoin rules. They argue that the current MiCA framework's requirement of a 60% reserve rule could put banks at risk.
The central banks want issuers to move more reserves into short-term, highly liquid assets instead of commercial bank deposits. The ECB is concerned that if stablecoin reserves can quickly move when crypto markets fall, it may lead to large redemption requests and make bank deposits less stable, increasing liquidity risks for lenders.
The European System of Central Banks (ESCB) wants MiCA to require a minimum share of reserves to be held in assets that mature within one to five working days. This would give stablecoin issuers access to assets that can be converted or settled quickly when users redeem their tokens, reducing the amount of stablecoin-related funding directly tied to traditional banks.
The change could impact major euro stablecoins, including Circle's EURC, which is already MiCA-compliant and fully backed by euro-denominated assets. Circle says EURC had about €411 million in circulation.