The European Central Bank and the national central banks of the European Union want Brussels to delete a MiCA rule that forces stablecoin issuers to hold part of their reserves as bank deposits, arguing the requirement could expose lenders to runs. The European System of Central Banks, a body grouping the ECB with the central banks of all 27 member states, filed the comments on Tuesday in its response to the review by the European Commission of the Markets in Crypto-Assets regulation, per Reuters.
Under MiCA, stablecoin issuers must keep 30 percent of reserve assets as bank deposits. For major issuers the minimum rises to 60 percent. The central banks say that setup is backwards: instead of making the system safer, it turns relatively sticky retail deposits into issuer money that can leave a bank almost overnight.
“If reserves are held as bank deposits, stablecoins can alter banks funding structures by replacing relatively stable retail deposits with deposits from stablecoin issuers, which tend to be less stable and more sensitive to market conditions,” the ESCB paper said.
What the central banks want instead
The ESCB proposes replacing the deposit requirement with liquidity standards. Issuers would have to hold a minimum share of reserves in assets that can be converted into cash within one and five working days. The filing points to overnight repurchase agreements and short-term government bonds as suitable instruments.
That tracks standards the European Banking Authority has already sketched out. Under the EBA framework, significant stablecoins would need at least 40 percent of reserves convertible within one business day and 60 percent within five. The difference is the venue: cash-like instruments rather than commercial bank balance sheets.
The logic is a run scenario. If a stablecoin faces heavy redemptions, an issuer parked at a bank would pull its deposits quickly to meet them. The bank loses funding at the worst possible moment, and stress in crypto markets passes straight into banking. Holding short-dated government paper breaks that chain, since the issuer can sell into deep markets without touching a lender.
The Tether precedent
The deposit clause has a well-known critic: Tether. The USDT issuer refused to seek an EU license partly over this requirement, and it remains the largest stablecoin in circulation despite having no MiCA-compliant offering. BeInCrypto noted the irony directly: the rule Tether rejected is now the one the central banks of Europe want gone.
The review also lands at an awkward moment for the wider framework. The central banks wrote that European regulators face “material challenges” enforcing MiCA, because non-compliant crypto companies keep serving EU customers. Crypto firms had until June this year to secure a license or wind down operations in the bloc, yet the ESCB says enforcement has not caught up with the deadline.
Why the timing matters
The submission is part of the first major review of MiCA since the framework came into force last year. The Commission opened a targeted consultation on how the rules are working, and responses from institutions carry formal weight in the review process. A rewrite of a core reserve provision would still need agreement across the co-legislators, so nothing changes immediately, but the direction of the request is unusual: the central banks are asking for less bank involvement, not more.
ECB research has fed this debate for months. Executive Board member Isabel Schnabel argued in a June speech that EU rules discourage stablecoin development in Europe and cited work proposing a lower deposit share, direct remuneration of reserves and access to the ECB balance sheet for issuers. The ESCB filing now puts that thinking into an official consultation response.
Context: a split regulatory picture
The United States signed its own stablecoin law, the GENIUS Act, last year, but wider US crypto rules are effectively frozen after the Senate failed last week to advance the Clarity Act market structure bill. That leaves the EU review as one of the few live rulemaking processes for stablecoins among major jurisdictions, and whoever moves first sets a template others tend to copy.
Regulators and financial stability bodies have warned for years that stablecoins, tokens pegged to a currency and usually the dollar, could transmit problems from crypto markets into the wider financial system. The ESCB submission does not dispute that risk. It argues the current MiCA remedy creates a different one, moving fragility from the crypto balance sheet into bank funding.
Banks will read the proposal differently. Banking groups fought hard during the US Clarity Act debate for stricter limits on stablecoin yields, worried that deposits would drain into tokenized cash. In Europe the deposit requirement was one of the few provisions that routed stablecoin money through bank balance sheets. Losing it removes that benefit, and the banking lobby can be expected to respond before any legislative change.
For issuers, the practical effect would be flexibility. Reserve portfolios built around repos and short-dated bonds resemble money market fund management more than bank deposits, and several issuers already run that structure in other jurisdictions. Aligning MiCA with it would lower the cost of an EU license and could bring holdouts like Tether back toward compliance, though nothing in the filing suggests the ECB wants to make life easier for the largest offshore issuer.
The consultation response is a formal input, not a final rule. But the weight behind it matters: when the ECB and 27 national central banks jointly ask for a provision to be deleted, the Commission rarely ignores the letter.