EU Central Banks Seek Wider Stablecoin Yield Ban

The European Central Bank (ECB) and EU national central banks have requested that the European Commission widen the ban on stablecoin interest to include lending, staking, and borrowing. Currently, MiCA bars stablecoin issuers from paying holders interest, but the central banks argue this has not been enough.

Stablecoins can be transformed into yield-bearing arrangements through various structures, potentially circumventing the prohibition on direct remuneration. The ECB wants the ban to apply to unregulated services as well, including crypto borrowing, lending, and staking.

The central banks have also proposed stricter reserve requirements for stablecoin issuers, with specified portions of reserves maturing within one to five working days. This is aimed at reducing the risk of large stablecoin deposits becoming an unstable source of bank funding.