EU Central Banks Seek Stablecoin Regulation Overhaul

European central banks are calling for a rethink of a rule designed to make stablecoins safer in the EU. The Markets in Crypto-Assets (MiCA) regulation requires issuers of non-significant tokens to hold at least 30% of their reserves as deposits with EU credit institutions, rising to 60% for significant tokens.

The European System of Central Banks wants this fixed minimum removed and instead use a maturity test to determine the safety of reserves. The proposal would allow issuers to keep their deposits eligible while giving them more flexibility in how they allocate their assets.

This change is part of the EU's review of MiCA, which is currently consulting on the regulation until September 30. The decision ultimately comes down to the architecture of redemption safety, with a deposit quota emphasizing the location of reserves and a maturity test emphasizing how quickly a diversified reserve can turn into cash.