ECB Suggests Dropping Stablecoin Reserve Rule Amid Lender Risk Concerns

The European System of Central Banks (ESCB) has suggested dropping the requirement for stablecoin issuers to hold a minimum proportion of their reserve assets as bank deposits.

This recommendation comes in response to a consultation on the MiCA regulations, which are EU-wide crypto rules that came into effect last year. The current rule requires stablecoin issuers to hold 30% of their reserves as bank deposits or 60% for major issuers.

The ESCB argues that holding reserves as bank deposits can create risks for lenders if stablecoins and less stable deposits are interchanged, potentially leading to a run on stablecoins.

The central banks also expressed concerns about multi-issuance models, where global stablecoin firms treat tokens issued in the EU as interchangeable with those outside the bloc. They recommended that MiCA rules be updated to include safeguards if multi-issuance is allowed in the future.