ECB Tells MiCA: Take The Money Out Of The Banks 🏦💸

The European Central Bank and fellow EU central banks are pushing to scrap mandatory bank-deposit thresholds for stablecoin reserves under the Markets in Crypto-Assets Regulation (MiCA), warning that large deposits at commercial lenders could transmit liquidity stress to the banking system. In a response published Tuesday to the European Commission's review of MiCA, the European System of Central Banks (ESCB) called for removing rules requiring issuers to hold at least 30% of reserves, or 60% for significant stablecoins, as bank deposits.

The ESCB argued the current deposit rule "creates a direct link between issuers and credit institutions" and could expose banks to sudden outflows if a stablecoin run forced issuers to pull funds. It proposed replacing the deposit floor with minimum liquidity thresholds tied to the maturity of reserve assets, and pointed to overnight reverse repurchase agreements and short-term sovereign bonds as alternative instruments issuers could use to meet those requirements.

The proposal echoes draft standards published by the European Banking Authority in 2024, which would require significant stablecoins to hold at least 40% of reserves in assets maturing within one working day and 60% within five working days. For non-significant tokens, the corresponding thresholds are 20% and 30%.

Separately, the ESCB flagged "material challenges" in enforcing MiCA, noting that non-compliant crypto companies can still reach EU customers despite the bloc's licensing regime. The central banks did not name any specific firms in their response. The push comes as the ECB separately advances Pontes, a new initiative to settle tokenized assets across European books without relying on stablecoins.