ECB seeks MiCA shift from bank deposits to stablecoin liquidity rules

The European Central Bank and EU central banks want to replace MiCA requirements for stablecoin reserves held as bank deposits with minimum liquidity thresholds. The European System of Central Banks made the proposal in its response, published Tuesday, to the European Commission’s review of the Markets in Crypto-Assets Regulation. The ESCB called for removing rules requiring at least 30% of reserves, or 60% for significant stablecoins, to be held as bank deposits. The ESCB said that requirement creates a direct link between stablecoin issuers and credit institutions. It warned that a stablecoin run could force an issuer to rapidly withdraw deposits and create liquidity problems for banks. The proposed thresholds would apply to reserve assets maturing within one and five working days. The ESCB identified overnight reverse repurchase agreements and short-term sovereign bonds as alternative instruments that issuers could use to meet liquidity requirements. The ESCB cited draft rules published by the European Banking Authority in 2024. Those rules would require significant stablecoins to hold at least 40% of reserves in assets maturing within one working day and 60% in assets maturing within five working days. For non-significant tokens, the corresponding thresholds would be 20% and 30%. The ESCB also warned of material challenges in enforcing MiCA. It said non-compliant crypto companies can still access EU customers despite the bloc’s licensing regime.