ECB seeks changes to MiCA stablecoin rules

TLDR

The European Central Bank wants MiCAs core stablecoin rules rewritten to focus on liquidity rather than forcing issuers to park large chunks of reserves in commercial banks.

1. ECB and EU central banks propose scrapping MiCAs 30% and 60% bank?deposit floors for stablecoin reserves in favor of short?maturity, liquidity?focused rules.
2. They also back stricter bans on stablecoin yield, targeting lending, staking and rewards that make tokens resemble interest?bearing bank deposits.
3. If adopted, these changes could ease compliance for issuers like Tether (USDT) but tighten controls on euro and dollar stablecoin use inside the EU over the next few years.

Deep Dive

1. What The ECB Wants Changed

Under MiCA, issuers of asset?referenced and e?money tokens must hold at least 30% of reserves in bank deposits, rising to 60% for significant stablecoins. European central banks now want those fixed deposit ratios removed and replaced with liquidity rules that require a portion of reserves to mature within one and five working days, referencing draft European Banking Authority standards where significant tokens hold 40% of reserves available within one day and 60% within five days, and non?significant tokens 20% and 30% respectively, using tools like overnight repos and short?term sovereign bonds as liquid assets. This shift is laid out in the European System of Central Banks response to the MiCA review, which also flags material challenges enforcing the current framework against offshore platforms that still reach EU users.

2. Why Central Banks Are Pushing This

Central banks argue that MiCAs deposit rule creates a direct link between stablecoin issuers and commercial banks, so a run on a big token could force rapid withdrawals that drain bank liquidity and amplify stress. By focusing on how quickly reserves can be turned into cash instead of how much sits in banks, regulators aim to reduce contagion risk while still ensuring fast redemption. At the same time, the ECB wants the existing ban on paying interest on stablecoins extended to lending, borrowing, staking and other indirect yield schemes, warning that electronic money is intended to be used for making payments and not as a means of saving and that yield?bearing stablecoins distort competition with banks and blur the line with insured deposits.

3. Impact On Issuers, Users And Timeline

MiCAs deposit rule has already deterred some issuers; for example, Tether publicly refused to seek an EU license, arguing that forcing a hypothetical 10 billion euro stablecoin to keep 6 billion in bank deposits under the 60% rule exposes users to bank failures and low insurance coverage. If the ECBs preferred model is adopted, large dollar and euro stablecoins could manage reserves more like US Treasury?heavy portfolios, potentially improving yield and lowering bank exposure, while still meeting strict liquidity thresholds. However, central banks simultaneously support broader bans on stablecoin remuneration and stronger powers to limit tokens pegged to foreign currencies like the dollar when stability risks arise, which could constrain some business models and EU?focused products. The proposals feed into an ongoing European Commission MiCA review, with consultation closing around the end of September and lawmakers expected to consider legislative changes in 2027.

Conclusion

The ECBs push to rewrite MiCAs stablecoin rules aims to reduce bank contagion risk and clamp down on yield?bearing cash?like tokens while keeping stablecoins useful for payments and trading. For issuers, a shift from rigid bank?deposit floors to liquidity?maturity requirements could ease reserve management and open the door to broader EU participation, even as stricter bans on rewards and closer scrutiny of foreign?currency pegs narrow some profit and product options. For market participants, the regulatory direction is clear: stablecoins in Europe are likely to become more tightly supervised money?market instruments rather than high?yield savings substitutes.