ECB proposes liquidity-focused alternative to MiCA's stablecoin reserve rule
In brief
- ECB submitted formal response recommending elimination of MiCA's fixed bank-deposit percentages for stablecoin issuers
- Current rules mandate 30% bank deposits for non-significant tokens and 60% for significant ones
- ECB proposes liquidity-focused rule requiring reserve assets to mature within 1-5 working days
- Mandatory deposits expose banks to volatile, flight-prone deposits during redemption waves, ECB argues
The current MiCA framework
MiCA's stablecoin provisions became fully applicable during 2024 and 2025, making Europe the first major jurisdiction to impose a comprehensive regulatory framework on crypto assets. Under current rules, non-significant stablecoin issuers must hold a minimum of 30% of reserves in bank deposits, while significant tokens must hold 60%.
The deposit-percentage approach creates real constraints. A 60% bank-deposit requirement for significant tokens constrains how issuers can manage reserve portfolios, as money in bank deposits typically yields less than money in short-duration government securities. For a significant stablecoin issuer holding billions in reserves, the gap between bank deposit rates and short-duration government bond yields could translate to hundreds of millions in annual revenue.
ECB's stability argument
The ECB's core complaint centers on unintended consequences. The ECB argues that mandatory bank-deposit requirements expose banks themselves to volatile, potentially flight-prone deposits that could vanish during redemption waves.
Think of it this way: if a stablecoin faces redemption pressure, users pull their capital. Those deposits leave the bank's balance sheet overnight. The ECB contends this creates exactly the kind of instability regulators were trying to prevent.
Industry groups like Bruegel and Blockchain for Europe had already flagged concerns about the concentration risk that mandatory deposit requirements create. The ECB's formal response amplifies those concerns at the institutional level.
The proposed liquidity standard
The ECB is proposing a liquidity-focused rule. Under this framework, reserve assets must mature within one to five working days. This approach prioritizes accessibility and stability without forcing issuers into a specific asset class.
The proposal isn't unique to Europe. The US GENIUS Act takes a different approach to stablecoin reserves, without imposing the same rigid deposit-percentage requirements that MiCA currently enforces. The ECB's shift signals growing consensus that rigid mandates may undermine the stability goals they're meant to serve.
The ESCB also identified enforcement gaps as a challenge, particularly regarding non-compliant platforms operating outside European borders that can still reach EU users. Any revised framework will need to address this cross-border enforcement reality.
