MiCA Regulation Update: ECB Rethinks 60% Deposit Rule for Stablecoins

The European Central Bank and EU central banks are calling for changes to MiCA stablecoin reserve rules, including the requirement for significant stablecoins to keep at least 60% of reserves in bank deposits.

The European System of Central Banks says a liquidity based approach could reduce risks created by sudden stablecoin redemptions.

Instead of fixed deposit thresholds, the proposal would focus more on reserves that can mature or become available within one to five working days.

Key Takeaways

• The ECB wants to remove fixed bank deposit thresholds for stablecoin reserves, including the 60% requirement for significant tokens.
• The proposed approach focuses on liquidity, with reserves available through assets maturing within one and five working days.
• MiCA rules have not changed yet. The proposal is part of the European Commission’s review of the framework.

ECB Stablecoin Regulation Targets the 60% Rule

Source: Pexels

The European System of Central Banks, which includes the ECB and national central banks across the EU, has raised concerns about the current reserve structure under MiCA.

Existing rules require at least 30% of reserves for asset referenced tokens to be held as deposits in credit institutions, while the threshold for significant asset referenced tokens is 60%.

The central banks’ concern is linked to liquidity. A large stablecoin issuer can face substantial redemption requests when market conditions become stressed.

If a significant portion of its reserves sits in bank deposits, quickly moving those funds could create pressure on the banks holding them.

What the ECB Is Proposing

The ESCB response favors replacing fixed deposit requirements with liquidity thresholds based on how quickly reserve assets can become available. The proposal points toward:

• Assets maturing within one working day
• Assets maturing within five working days
• Overnight reverse repurchase agreements
• Short term sovereign bonds

This would shift the focus from where reserves are held to how quickly they can be accessed.

Read Also: 37 European Banks Just Joined Forces to Take Down Dollar Stablecoin Dominance

Changes to MiCA Stablecoin Rules Could Focus on Liquidity

The proposed changes to MiCA stablecoin rules reflect a different way of thinking about reserve safety.

Rather than requiring issuers to maintain a fixed share of reserves as bank deposits, the ESCB wants stablecoin issuers to demonstrate that enough assets can be accessed quickly during periods of heavy redemption.

This distinction matters because stablecoins operate continuously, while some traditional financial assets settle on conventional schedules.

The ECB has previously highlighted the mismatch between 24 hour stablecoin settlement and traditional asset settlement, while also noting that the current deposit requirements can create links between stablecoin issuers and banks.

Why Liquidity Matters

A stablecoin holder typically expects to be able to redeem tokens according to the terms established by the issuer.

If many holders attempt to redeem at the same time, the issuer needs sufficient liquid reserves.

Under the proposed approach, assets with short maturities could provide another source of liquidity without requiring such a large fixed share to remain in commercial bank deposits.

The idea does not remove reserve requirements. Instead, it changes the emphasis toward the timing and availability of reserve assets.

EU Central Banks Crypto Concerns and Bank Liquidity

The debate also reflects concerns about the connection between stablecoins and traditional banks.

The ECB has previously explained that stablecoin reserves can create risks in both directions.

A stablecoin run could lead to large withdrawals from banks, while problems at a bank holding stablecoin reserves could also affect confidence in the token.

The March 2023 failure of Silicon Valley Bank provides a relevant example.

Circle disclosed that $3.3 billion of USDC reserves were held at SVB, and concerns surrounding access to those reserves contributed to pressure on USDC’s dollar peg at the time.

The Core Issue

The central question is not simply whether stablecoin reserves should be liquid.

MiCA already requires reserves to address liquidity risks and gives regulators a role in specifying liquidity requirements.

Instead, the current discussion is about how that liquidity should be maintained. A deposit based model creates a direct relationship between issuers and banks.

A broader liquidity model could allow issuers to use additional instruments while still requiring reserves to be readily available.

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What Could MiCA Changes Mean for Stablecoin Issuers?

If European lawmakers eventually change the reserve framework, major stablecoin issuers could have to adjust how they manage their reserves.

The exact impact would depend on the final rules and the liquidity thresholds adopted. For significant issuers, the change could provide greater flexibility in choosing reserve assets.

Instead of concentrating a large percentage in commercial bank deposits, issuers could potentially rely more heavily on short maturity government securities, reverse repos, and other highly liquid instruments.

At the same time, moving away from a fixed deposit requirement would not mean that issuers could hold reserves in any asset they choose.

Existing MiCA Safeguards

MiCA requires reserve assets for asset referenced tokens to be managed so that risks connected to the referenced assets and redemption liquidity are addressed.

It also requires invested reserve assets to be highly liquid and subject to limited market, credit, and concentration risks.

That means a revised framework would still operate within broader liquidity and risk management requirements.

For issuers, the main change could therefore be greater flexibility in meeting those requirements.

For banks, it could reduce the direct dependence on stablecoin related deposits as a source of funding.

MiCA Enforcement and What Happens Next

Reserve rules are not the only issue raised by the European central banks.

The ESCB has also pointed to challenges in enforcing MiCA against crypto companies that continue serving EU customers without complying with the framework.

Recent reporting on the ESCB response says the central banks warned that non compliant firms can create competitive concerns for companies operating under EU requirements.

This makes the MiCA review broader than the 60% deposit rule alone.

What to Watch

The key developments will include:

1. How the European Commission responds to the ESCB proposal.
2. Whether EU lawmakers propose formal amendments to MiCA.
3. How new liquidity thresholds would be calculated.
4. Which reserve assets would qualify.
5. How existing stablecoin issuers would transition to any new framework.

For now, the 60% commercial bank deposit requirement remains part of the existing MiCA framework.

The ECB and EU central banks have proposed changing it, but a proposal is not the same as a completed legislative amendment.

Read Also: MiCA Deadline Hits EU Crypto Users & Exchanges

Conclusion

The ECB and EU central banks are asking for a significant rethink of MiCA stablecoin reserve rules.

Their proposal would move away from fixed bank deposit thresholds, including the 60% requirement for significant stablecoins, and place greater emphasis on reserves that can become available within one to five working days.

The goal is to address liquidity risks while reducing the direct connection between large stablecoin reserves and commercial banks.

However, the existing MiCA requirements remain in place until any formal changes are adopted.

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FAQ

What is the MiCA 60% stablecoin rule?

Under the existing MiCA framework, significant asset referenced tokens must maintain a minimum amount of deposits in credit institutions, with the relevant threshold set at 60% for each referenced official currency.

Why does the ECB want to change the rule?

The ECB and EU central banks are concerned that large stablecoin deposits could create liquidity pressures for commercial banks if issuers need to withdraw substantial amounts during a redemption event.

What could replace the 60% deposit requirement?

The ESCB has proposed liquidity requirements based on reserve assets that mature or become available within one and five working days. It has also identified overnight reverse repos and short term sovereign bonds as possible instruments.

Have MiCA stablecoin rules changed already?

No. The ECB and EU central banks have submitted a proposal as part of the European Commission’s MiCA review. The existing requirements remain applicable unless and until the relevant EU legislation is changed.

How could the changes affect stablecoin issuers?

If adopted, the changes could give major issuers more flexibility in managing reserves while placing greater emphasis on rapid access to liquid assets. The exact impact will depend on the final rules and liquidity thresholds.

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