ECB Seeks Tougher Crypto Rules, Targets US Dollar Stablecoins

The European Central Bank (ECB) has called for tougher regulations on cryptocurrencies in the EU, including stricter rules on stablecoins and staking. The ECB's response to the European Commission's review of the Markets in Crypto-Assets Regulation (MiCA) argues that stablecoins should not be allowed to pay interest, a provision already banned under MiCA but which some exchanges have gotten around by offering lending and borrowing services.

The central banks also want stronger tools against tokens pegged to foreign currencies, such as the ability to impose a prohibition on issuing new tokens or requiring issuers to redeem existing ones. They see limited benefit in stablecoins for everyday payments within the EU, given instant bank transfers and the planned digital euro.

The ECB's response comes after it unveiled its Pontes system for settling tokenized assets in central bank money. The European Commission's consultation on MiCA will close on 30 September, a month later than planned, with the Commission expected to revise the law in 2027.