ECB and EU Central Banks Propose Scrapping Stablecoin Bank-Deposit Rule, Seek Tougher Oversight

The European Central Bank and the European System of Central Banks (ESCB) have asked the European Commission to delete the Markets in Crypto-Assets Regulation (MiCA) rule that forces stablecoin issuers to hold a fixed percentage of reserves in bank deposits. The recommendation, published Sept. 22 in the ESCB’s consultation response to the Commission’s MiCA review, proposes replacing the deposit mandate with minimum liquidity thresholds requiring reserve assets to mature within one to five working days.

Under the current framework, issuers of non-significant tokens must keep at least 30% of reserves in bank deposits, with the threshold rising to 60% for tokens classified as significant. The ESCB argues that this requirement “creates a direct link between issuers and credit institutions” and could expose banks to liquidity problems if a stablecoin run forces rapid withdrawals. Instead, it points to overnight reverse repurchase agreements and short-term sovereign bonds as suitable instruments for achieving liquidity.

The central banks cited the European Banking Authority’s 2024 draft rules as a reference point: those draft rules required significant stablecoins to hold at least 40% of reserves in assets maturing within one working day and 60% within five working days, with 20% and 30% thresholds respectively for non-significant tokens. The ESCB did not propose specific percentages of its own.

**Alignment with US approach**

The proposal would narrow the practical difference between the EU rulebook and the US approach under the GENIUS Act, which regulates stablecoin reserves without rigid deposit-percentage requirements. If adopted, issuers operating in both markets would face less divergence in how they structure reserves, shifting the focus to maturity-based liquidity floors rather than where the money must sit.

**Broader tightening measures**

Beyond the reserve changes, the ESCB also called for tougher EU crypto rules, according to a report from Euronews. The central banks are seeking a wider ban on interest payments on stablecoins, new powers to restrict tokens pegged to foreign currencies such as the U.S. dollar, and EU-level supervision of crypto firms. The ESCB also warned of “material challenges” enforcing MiCA, saying non-compliant crypto companies operating outside EU borders can still reach EU customers.

**Industry echoes and bank-risk parallels**

The central banks’ argument mirrors concerns that Tether CEO Paolo Ardoino has raised since 2024. In an October 2024 interview, Ardoino illustrated the risk with a hypothetical stablecoin holding €10 billion in reserves, €6 billion of which would have to be kept in bank deposits. If a bank lent out 90% of those funds, he said, only €600 million would remain available, potentially triggering a liquidity crunch if the issuer suddenly needed billions to meet redemptions.

After the ESCB announcement, Ardoino posted on X: “Europe’s central banks want Brussels to delete a MiCA rule on stablecoin reserves. It forces large issuers to keep 60% of that money in commercial banks. Tether refused an EU license over the same clause.”

The ESCB explicitly cited the March 2023 collapse of Silicon Valley Bank, which triggered a run on Circle’s USDC stablecoin after Circle disclosed that $3.3 billion of its reserves were held at the bank. The central banks said risks can flow in both directions — a stablecoin run could force an issuer to rapidly withdraw deposits and create liquidity problems for a bank, especially if stablecoin reserves account for a significant share of its funding.

**Next steps**

The ESCB’s response is a recommendation to the Commission’s MiCA review and is not a change in law. Neither the ECB nor the Commission has given a timeline for adopting the recommendation. MiCA’s stablecoin provisions became fully applicable during 2024 and 2025, making the EU the first major jurisdiction with a full crypto-asset framework. The proposal now rests with the European Commission as it weighs revisions to the regulation.