ECB Proposes Overhaul of MiCA Stablecoin Reserve Requirements

The European Central Bank and the EU’s 27 national central banks are pushing to replace the current MiCA framework, which requires stablecoin issuers to hold 30% to 60% of their reserves in commercial bank deposits. Regulators now fear that these holdings could transmit systemic stress from the crypto sector to traditional lenders, as issuer deposits lack the stability of household funds.

Under the proposed model, issuers would instead be required to maintain minimum proportions of assets maturing within one to five working days. This pivot aims to prioritize liquidity access over static placement in bank accounts. The shift echoes concerns raised by Tether CEO Paolo Ardoino as early as 2024, who argued that forcing large-scale deposits into commercial banks creates a dangerous feedback loop. Ardoino specifically warned that if a stablecoin issuer faces a bank run, the resulting bankruptcy of the lender could permanently impair the reserves backing the tokens.

While the European Commission continues its broader review of MiCA, the ECB's intervention highlights the friction between digital asset regulation and banking safety. Current rules have already led major exchanges, including Coinbase and Binance, to restrict or remove support for USDT in the European market. By advocating for a model that emphasizes asset maturity, the ESCB hopes to mitigate risks of contagion while addressing the structural incompatibility identified by industry leaders and central bankers alike.