The European Central Bank (ECB) and other EU central banks are calling for changes to the rules governing stablecoin reserves, arguing that requiring issuers to keep a fixed share of their reserves in bank deposits could create risks for the banking system.
The European System of Central Banks (ESCB), which includes the ECB and the national central banks of EU member states, made the recommendation in its response to a consultation on the European Union’s Markets in Crypto-Assets (MiCA) regulations.
Under the current rules, stablecoin issuers must keep 30% of their reserves in bank deposits, while major issuers are required to hold 60%.
The central banks believe this requirement could make banks more exposed to sudden withdrawals if investors rapidly redeem their stablecoins.
“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 central banks’ paper said.
Central Banks Propose More Liquid Reserve Assets
Rather than requiring a specific percentage of reserves to be held as bank deposits, the central banks have proposed a different approach. They recommend setting up a minimum percentage of reserves that must be held in assets capable of maturing within one to five working days.
The proposal is aimed at maintaining quick access to reserve funds while reducing the potential impact of stablecoin-related withdrawals on banks.
Stablecoins are digital tokens designed to maintain a stable value, commonly linked to currencies such as the US dollar.
The issue has attracted wider attention because regulators and financial stability authorities have warned that problems in the crypto market could spread into the traditional financial system.
Large-scale redemptions of stablecoins, for example, could create pressure on the assets backing those tokens and the institutions holding them.
Multi-Issuance and Enforcement Remain Key Challenges
The central banks also raised concerns about multi-issuance models, in which global stablecoin companies treat tokens issued inside the EU as interchangeable with tokens issued outside the bloc.
According to the central banks, these arrangements create financial stability concerns and are not permitted under the current MiCA framework.
They said that if multi-issuance were permitted in the future, MiCA would need stronger safeguards, including an assessment of whether the regulations of other countries provide an equivalent level of protection.
The central banks also pointed to difficulties in enforcing MiCA rules.
Although crypto companies were required to obtain an EU licence or wind down their operations by June, some non-compliant firms continue to provide services to EU customers. The central banks said this creates concerns over investor protection and highlights the need for stronger enforcement across the bloc.
