ESCB Calls for Overhaul of Stablecoin Reserve Rules
The European System of Central Banks (ESCB) has called for the removal of a key rule governing stablecoin reserves in the EU. The rule, found in Article 36 of the Markets in Crypto-Assets (MiCA) regulation, requires issuers to hold at least 30% of their reserves as bank deposits and 60% for 'significant' stablecoins.
The ESCB argues that this rule creates a direct link between stablecoin issuers and credit institutions, which can lead to liquidity strain in the traditional banking system during periods of high redemption demand. To mitigate this risk, the ESCB proposes that reserves should be tied to asset maturity rather than bank deposit relationships.
Under the proposed alternative, significant stablecoins would need to hold at least 40% of their reserves in assets maturing within one working day and 60% within five working days. Non-significant stablecoins would face lighter thresholds of 20% and 30%, respectively.
The ESCB's proposal is part of a broader response to the European Commission's MiCA review, which aims to strengthen the regulatory framework for tokenized finance in the EU. The central banks have also flagged concerns about maintaining a stable value, scaling safely, and avoiding fragmented liquidity pools in large-scale wholesale settlement using stablecoins.
The ESCB has explicitly backed keeping the ban on paying interest or remuneration to stablecoin holders, which is currently part of the MiCA regulation. It has also called for EU-wide rules treating crypto lending, borrowing, and staking based on their economic function rather than the underlying technology used.