ECB And EU Central Banks Push To Scrap Mandatory Bank Deposit Reserves For Stablecoins
The European Central Bank (ECB) and the central banks of the European Union’s 27 member states have called for the abolition of a rule requiring stablecoin issuers to hold a minimum share of their reserve assets as bank deposits, arguing that the current framework could transmit instability from crypto markets into the traditional banking system.
In a joint response to a public consultation on the Markets in Crypto-Assets (MiCA) regulation, the European System of Central Banks (ESCB) warned that the existing requirement — under which stablecoin issuers must keep 30% of their reserves in bank deposits, rising to 60% for major issuers — exposes lenders to the risk of sudden large-scale withdrawals. According to the central banks, deposits from stablecoin issuers tend to be less stable than ordinary retail deposits and are more sensitive to shifts in market conditions. A run on a large stablecoin could therefore force issuers to withdraw these funds rapidly, destabilizing the funding structures of the banks holding them.
As an alternative, the ECB proposed that MiCA specify a minimum percentage of reserve assets to be held in highly liquid instruments maturing within one to five business days. Such assets would provide issuers with the flexibility to meet redemption demands without creating concentrated deposit risks for the banking sector. The concerns reflect long-standing warnings from regulators and financial stability bodies that stablecoins — crypto tokens typically pegged to the US dollar or another currency — could serve as a channel through which turmoil in digital asset markets spills over into the wider financial system.
Multi-Issuance Models and Enforcement Gaps Under Scrutiny
Beyond the reserve composition debate, the central banks reinforced the position of the European Systemic Risk Board that multi-issuance stablecoin models pose financial stability risks and are not permitted under current rules. In such arrangements, global stablecoin firms treat tokens issued within the EU as interchangeable with those issued elsewhere, potentially allowing regulatory arbitrage. Should multi-issuance ever be permitted in the future, the ESCB argued, MiCA would need a comprehensive framework of safeguards, including an assessment of whether stablecoin regimes in other jurisdictions can be considered equivalent.
The comments come amid a shifting global landscape. The United States signed a law last year establishing a regulatory regime for stablecoins, but broader American crypto legislation has stalled after the Senate failed to advance the Clarity Act. Within the EU, crypto companies faced a June deadline to obtain an MiCA license or wind down their operations in the bloc.
The central banks also cautioned that European regulators face material challenges in enforcing the new framework, noting that non-compliant crypto firms continue to reach EU customers — a situation that raises significant investor protection concerns and underscores the gap between rulemaking on paper and implementation in practice.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in crypto, AI, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
