The European Central Bank has increased its three key interest rates by 25 basis points. Starting September 16, the deposit facility rate for banks will reach 2.50%. The regulator attributes this decision to persistent inflation, which is projected to reach 3.0% this year, 2.5% in 2027, and 2.1% in 2028, largely due to energy price pressures from the Middle East conflict.
Despite rising rates, holders of euro-denominated stablecoins continue to receive zero yield. Under the MiCA regulation, stablecoins like Circle’s EURC are classified as e-money tokens. Article 50 explicitly prohibits issuers and crypto platforms from paying interest or providing benefits linked to the duration of token holdings.
Issuers are required to safeguard reserves backing these tokens, with at least 30% held in bank deposits. While these reserves generate income for the issuers, this profit cannot be passed on to token holders. Circle has been operating EURC under a French e-money license since July 2024, with a current market value of approximately $466 million.
The regulatory gap between the ECB deposit rate and the permitted yield for stablecoin holders has widened to 250 basis points. When MiCA stablecoin rules were implemented in June 2024, the ECB deposit rate stood at 3.75%. The ECB has stated it is not pre-committing to a specific future rate path.
