European Central Banks Oppose Stablecoin Bank Deposit Rules

The European Central Bank and other EU central banks are opposing a regulatory rule that requires stablecoin issuers to hold a minimum proportion of reserve assets as bank deposits. In a formal response to a consultation on the Markets in Crypto-Assets (MiCA) regulations, the European System of Central Banks argued that the current 60 percent bank deposit requirement for major issuers could expose lenders to stablecoin market volatility and less sticky deposits.

To mitigate these risks, the central banks recommended amending MiCA to replace the deposit requirement with a mandate to hold a minimum percentage of reserves in assets maturing within one to five working days. This shift would prioritize liquidity and stability over traditional bank deposits.

Beyond reserve requirements, the central banks warned that European regulators face material challenges in enforcing crypto rules. They noted that non-compliant firms continue to access EU customers, which creates significant investor protection concerns across the region.