ECB seeks tighter MiCA rules to block indirect stablecoin returns

The European Central Bank and the European Union’s national central banks want crypto platforms prevented from using lending, borrowing, staking and other products that offer indirect returns on stablecoin holdings. In a 57-page response to the European Commission’s consultation on reviewing the Markets in Crypto-Assets regulation, the European System of Central Banks said electronic money is intended for payments rather than saving. The group said it continues to support banning crypto-asset service providers from paying remuneration on stablecoins. It said the ban should not be limited to services already governed by MiCA, which began taking effect in June 2024, and should also cover unregulated activities including crypto lending, borrowing and staking. The banks said indirect returns could undermine the distinction between electronic money and bank deposits and distort competition across the European Union’s financial system. They said maintaining and, where necessary, strengthening the ban on both direct and indirect remuneration should be a legislative priority. The banks also proposed replacing requirements that issuers keep 30% to 60% of stablecoin reserves in bank deposits with liquidity rules based on how quickly reserve assets can be converted into cash.