The European System of Central Banks (ESCB) released a report on September 22 proposing changes to the Markets in Crypto-Assets (MiCA) regulation. Currently, MiCA mandates that stablecoin issuers maintain 30% of their reserves in bank deposits, with the requirement rising to 60% for major issuers.
The ESCB, which includes the European Central Bank and national central banks from 27 countries, suggests replacing these deposit requirements. The proposal advocates for holding a minimum percentage of assets that mature within one to five working days to mitigate risks associated with potential stablecoin runs.
The report warns that holding reserves as bank deposits could destabilize bank funding structures. Replacing retail deposits with issuer deposits may increase sensitivity to market conditions and reduce the aggregate deposit base, potentially impacting the ability of banks to provide credit to the economy.
Additionally, the ESCB noted that European regulators face significant challenges in enforcing existing cryptocurrency rules. Non-compliant firms continue to serve EU customers, which the central banks argue undermines investor protection, market integrity, and the overall credibility of the regulatory framework.
