ECB Seeks Stablecoin Reserve Rule Revamp Amid Run Risks
The European Central Bank (ECB) and EU national central banks have called for stablecoin issuers to be released from a rule that locks up to 60% of their reserves in bank deposits. The rule, part of the Markets in Crypto-Assets Regulation (MiCA), was introduced last year.
According to the ECB's submission to the European Commission, the current quotas create a 'direct link between issuers and credit institutions'. A run on a token could force its issuer to pull cash quickly, putting pressure on any bank that is relying on it for funding. This, in turn, could lead to liquidity strain.
The central banks want to replace these minimum deposit quotas with liquidity floors measured by the maturity of reserve assets within one and five working days. They cite draft European Banking Authority standards as a starting point for this new approach.