ECB, EU cenbanks seek changes in MiCA’s minimum bank deposit for stablecoins
Reported by Cointelegraph · AI-assisted summary by ChikoCorp AI News Desk
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Summary
The European Central Bank (ECB) and other EU central banks, represented by the European System of Central Banks (ESCB), have proposed replacing the Markets in Crypto-Assets Regulation (MiCA) requirements mandating minimum bank deposit thresholds for stablecoin reserves with new liquidity requirements. They argue that the existing rules, which require at least 30% of reserves (or 60% for significant stablecoins) to be held as bank deposits, pose liquidity risks to banks during stablecoin runs. The ESCB suggests instead liquidity thresholds based on asset maturities within one and five working days, allowing for instruments like overnight reverse repurchase agreements and short-term sovereign bonds.
Why it matters
According to the ESCB, the current MiCA rules linking stablecoin issuers to credit institutions create a risk of liquidity problems if rapid withdrawal of deposits is necessary during a stablecoin run. This has implications for the stability of banks and stablecoin issuers alike, particularly if stablecoin reserves represent a significant portion of a bank’s funding. The source highlights that these concerns have been raised previously by industry figures such as Tether CEO Paolo Ardoino.
Key context
The ESCB’s call for revised MiCA rules aligns with draft guidelines from the European Banking Authority requiring significant stablecoins to hold reserves with maturities of at least 40% within one day and 60% within five days. Tether CEO Paolo Ardoino has warned since 2024 that MiCA’s bank deposit rules could cause systemic liquidity risks for banks and stablecoin issuers, noting the possibility of a liquidity crunch if banks lend out most deposited stablecoin reserves. The source also mentions the 2023 collapse of Silicon Valley Bank, which contributed to a run on Circle’s USDC stablecoin when a large portion of its reserves was held at the bank.
Key numbers and entities
The European Central Bank (ECB), European System of Central Banks (ESCB), European Commission, European Banking Authority, Tether, and CEO Paolo Ardoino are involved. MiCA currently requires at least 30% of stablecoin reserves to be bank deposits or 60% for significant stablecoins. Proposed liquidity thresholds include 40% reserves maturing within one working day and 60% within five working days for significant stablecoins. The Circle USDC stablecoin had $3.3 billion of its reserves at Silicon Valley Bank before the bank’s collapse.
What remains unclear
The source does not specify when or if the proposed changes to MiCA’s stablecoin reserve requirements will be officially adopted or the timeline for their implementation. It also does not detail how stablecoin issuers and banks might respond operationally to the new liquidity requirements or the precise regulatory process ahead. The extent to which non-compliant crypto companies currently impact EU customers remains qualitatively described but not quantified.