ECB Proposes Scrapping Bank Deposit Requirements for Stablecoin Reserves

The European Central Bank (ECB) and central banks of the European Union's 27 member states have proposed replacing bank deposit requirements for stablecoin reserves under the Markets in Crypto-Assets (MiCA) regulation with liquidity standards.

The move aims to address concerns that current rules could amplify liquidity pressures on the banking sector during large-scale stablecoin redemptions. Currently, stablecoins issued by electronic money institutions must hold at least 30% of reserves as deposits with credit institutions, rising to 60% for 'significant' stablecoins.

The European System of Central Banks (ESCB) argued that these requirements should be replaced with liquidity standards setting minimum ratios of reserve assets convertible to cash within one and five business days. Overnight repurchase agreements (repos) and short-term government bonds were cited as eligible liquidity instruments.