ECB Seeks Broader Stablecoin Yield Ban

The European Central Bank (ECB) and national EU central banks are pushing to expand the ban on stablecoin yield payments to cover lending, borrowing, staking, and other arrangements that generate indirect returns. This move aims to prevent stablecoins from being used as a means of saving or investment.

The current MiCA rules already bar crypto asset service providers (CASP) from paying interest directly on stablecoins. However, the central banks warn that this ban can be easily sidestepped through various financial products built around the token, allowing holders to earn returns without technically breaking the rules.

The ECB and EU central banks argue that maintaining a clear distinction between electronic money and bank deposits is crucial. They propose scrapping the fixed deposit rule, which requires issuers to hold at least 30% (or 60% for significant tokens) of reserves as bank deposits. Instead, they suggest introducing liquidity-based reserve asset maturities with assets maturing within one to five working days.