ECB Seeks Broader Stablecoin Ban to Cover Lending and Staking

The European Central Bank (ECB) and national central banks of the EU have submitted a response to the European Commission's targeted consultation on the MiCA review. In their 57-page response, they argue that the ban on paying interest on stablecoins should be extended to cover lending, borrowing, and staking products.

The ECB claims that decentralized finance protocols show how stablecoins can be transformed into yield-bearing arrangements through lending, staking, or other layered structures. They also point out that loyalty program benefits, liquidity mining incentives, rewards, fee reductions, and bundled services are indirect payments that should be caught by the ban.

The central banks want to regulate these products at the Union level, arguing that they should be classified based on their economic substance rather than the technology behind them. They also suggest loosening the reserve rule for issuers, which currently requires them to hold at least 30% of reserve assets as bank deposits.

The consultation closes on September 30, and the Commission's review report is due by mid-2027.