EU Central Banks Seek Stablecoin Reserve Rule Overhaul

The European Central Bank (ECB) and EU central banks have proposed changes to the Markets in Crypto-Assets Regulation (MiCA), specifically regarding stablecoin reserves. They want to replace mandatory bank-deposit thresholds with new liquidity requirements, citing potential liquidity risks for banks.

The proposal was made in response to the European Commission's review of MiCA, and it suggests removing rules requiring at least 30% of reserves, or 60% for significant stablecoins, to be held as bank deposits. Instead, they recommend minimum liquidity thresholds for reserve assets maturing within one and five working days.

The central banks pointed out that the existing requirement creates a direct link between issuers and credit institutions, which could expose banks to liquidity problems if a stablecoin run forces an issuer to rapidly withdraw deposits.

The proposal also mentioned draft rules published by the European Banking Authority in 2024, requiring significant stablecoins to hold at least 40% of reserves in assets maturing within one working day and 60% within five working days. For non-significant tokens, the thresholds are 20% and 30%, respectively.