EU Central Banks Push for Expanded Stablecoin Interest Ban

The European Central Bank (ECB) and EU national central banks have submitted a request to extend the ban on stablecoin interest, as outlined in the Markets in Crypto-Assets (MiCA) regulation. The current MiCA rules prohibit stablecoin issuers from paying holders interest, but the ECB argues that this has not been enough to prevent indirect yield through lending, staking, or other arrangements.

The European System of Central Banks (ESCB), which includes the ECB and national central banks, cited risks of indirect yield as the reason for their request. They argue that stablecoins can be transformed into yield-bearing arrangements, potentially circumventing the prohibition on direct remuneration.

The ESCB wants the ban to apply not only to regulated services under MiCA but also to unregulated ones, including crypto borrowing, lending, and staking. The central banks have also suggested regulating staking, lending, and borrowing of crypto-assets at the Union level, classifying them by economic substance rather than technology.

The ECB's request comes as a response to the European Commission's targeted MiCA consultation, which closes on September 30. A review report with potential legislative proposals is due by mid-2027.