European Central Bank seeks to scrap MiCA’s stablecoin reserve rule

The European Central Bank just told the European Commission that one of MiCA’s signature stablecoin rules needs to go. The mandatory requirement forcing stablecoin issuers to park a large chunk of their reserves in bank deposits, the ECB argues, is creating more problems than it solves. On September 22, the ECB and the broader European System of Central Banks (ESCB) submitted their formal response to the Commission’s consultation on the Markets in Crypto-Assets regulation. Their central recommendation: eliminate the percentage-based bank-deposit mandate entirely and replace it with something built around liquidity instead of arbitrary thresholds. What the current rules actually require Under MiCA as it stands today, issuers of e-money tokens (EMTs) and asset-referenced tokens (ARTs) must hold a minimum percentage of their reserves in traditional bank deposits. For tokens classified as “non-significant,” that floor sits at 30%. For “significant” tokens, those with larger market footprints, the number jumps to 60%. The ECB’s counterargument is that mandatory deposit requirements expose banks themselves to volatile, potentially flighty deposits. If a stablecoin faces a redemption wave...