ECB Seeks Changes to MiCA Stablecoin Reserve Rules

The European Central Bank (ECB) and the European Union’s national central banks have called for changes to MiCA’s stablecoin reserve requirements, proposing that the current bank-deposit thresholds be replaced with liquidity-based rules.

The recommendation was submitted on September 22 by the European System of Central Banks (ESCB) as part of the European Commission’s ongoing review of the Markets in Crypto-Assets Regulation (MiCA).

The proposal comes after the Commission opened its targeted review of MiCA earlier this year, which is examining how the framework is functioning and whether changes are needed.

ECB Targets MiCA’s Stablecoin Deposit Requirement

Under the current MiCA framework, issuers of asset-referenced tokens are required to hold at least 30% of their reserves as deposits with credit institutions. For significant e-money tokens, the requirement is 60%.

The ESCB has proposed removing these fixed bank-deposit requirements.

Instead, it wants MiCA to establish minimum proportions of reserve assets that can mature or become available within short periods, including one and five working days.

The central banks said the existing structure could create risks for commercial banks because deposits from stablecoin issuers may be more sensitive to market conditions than traditional retail deposits.

A sharp increase in stablecoin redemptions could therefore lead to rapid withdrawals from banks holding issuer reserves.

The proposed approach would focus more directly on the liquidity of stablecoin reserves and an issuer’s ability to meet redemptions.

Central Banks Seek Wider Stablecoin Restrictions

The ESCB’s response goes beyond the composition of stablecoin reserves.

The central banks also called for MiCA’s restrictions on remuneration for stablecoin holders to apply more broadly to arrangements involving crypto lending, borrowing and staking.

Their position is that economic returns linked to holding stablecoins should not be recreated through products or services that fall outside the existing scope of MiCA.

The ESCB also called for stronger measures concerning stablecoins denominated in foreign currencies, including concerns around the use of such tokens within the EU and the potential movement of reserves between jurisdictions.

EU Supervision Also in Focus

The ESCB said European authorities continue to face challenges enforcing MiCA when crypto firms that do not comply with the framework can still provide services to customers in the EU.

It therefore called for stronger EU-level supervision and enforcement mechanisms for crypto-asset service providers.

The central banks also raised concerns about arrangements involving the same stablecoin being issued both inside and outside the EU, arguing that this can make it difficult for European authorities to determine how many tokens are held within the bloc and whether sufficient reserves are available to meet EU-based redemptions.

Part of the Commission’s MiCA Review

The recommendations do not change MiCA immediately.

They form part of the responses being considered by the European Commission as it reviews the regulatory framework. Any changes to the regulation would still need to go through the EU legislative process.

The ESCB’s submission therefore represents a proposed direction for the future framework rather than a change to the rules currently applicable to stablecoin issuers.

The recommendations also come shortly after the ECB launched Pontes, its new system for settling wholesale tokenized-asset transactions in central bank money. The initiative is part of the Eurosystem’s broader strategy for tokenized finance.

The Commission’s MiCA review remains ongoing, with the ESCB’s response adding specific proposals on stablecoin reserves, remuneration, foreign-currency tokens and supervision to the broader discussion over how Europe’s crypto framework should evolve.