EU Central Banks Want Stablecoin Deposit Rule Replaced with Liquidity Test
The European System of Central Banks (ESCB) is pushing for changes to the Markets in Crypto-Assets Regulation (MiCA). They want to replace a rule that forces euro stablecoin issuers to keep at least 30% of reserves parked at commercial banks with a liquidity test. This change would rely on how quickly those reserves could be turned into cash, rather than relying on bank deposits.
The current rule is based on a fixed share of reserves held in bank deposits, regardless of the speed at which they can be accessed. The ESCB's proposed changes would use existing European Banking Authority (EBA) liquidity buckets to determine how quickly stablecoin issuers can access their reserves.
The ESCB's position cites the 2023 Silicon Valley Bank collapse as evidence that a fixed deposit rule is not neutral and can lead to distress between an issuer and a lender. The European Commission is now taking this position into account in its review of MiCA, which may inform a later legislative proposal.