ECB, EU central banks oppose stablecoin bank deposit rule

PARIS, Sept 22 : Stablecoin issuers should not be required to hold a minimum proportion of their reserve assets as bank deposits because they could leave lenders exposed to changes in the stablecoin market and less sticky deposits, the ECB and other EU central banks said on Tuesday.

The European System of Central Banks (ESCB) - a body made up of the ECB and the 27 national central banks of EU countries - made the comments in a response to a consultation on the MiCA regulations, a set of EU-wide crypto rules which came into force last year.

Instead of the current requirement for major stablecoin issuers to hold 60 per cent of their reserves as bank deposits, the central banks recommended changing MiCA to instead require a minimum percentage of the token reserves which should be held in assets which mature within one and five working days.

The central banks also said that European regulators are facing "material challenges" in enforcing the bloc's crypto regulations, as non-compliant crypto companies continue to have access to EU customers, creating investor protection concerns.