- EU central banks want MiCA fixed bank deposit requirements removed.
- Significant stablecoin issuers currently face a 60% deposit requirement.
- Tether has linked its MiCA license stance to the reserve framework.
The MiCA stablecoin reserve rule faces fresh pressure after Europe’s central banks asked Brussels to remove fixed bank deposit thresholds. The European System of Central Banks submitted the proposal during the European Commission’s ongoing MiCA review. The group includes the ECB and national central banks from all 27 EU members.
Current rules require issuers to hold at least 30% of reserves in commercial bank deposits. Significant issuers face a 60% requirement under the MiCA stablecoin reserve rule. The ESCB instead wants liquidity standards tied to assets maturing within one to five working days.
MiCA Stablecoin Reserve Rule Faces ECB Liquidity Challenge
The central banks say stablecoin deposits can behave differently from ordinary household deposits. Large redemptions could force issuers to withdraw substantial funds from banks quickly. That process could expose lenders to sudden funding pressure during market stress, according to Reuters.
The MiCA stablecoin reserve rule aimed to ensure issuers maintained accessible reserves for redemptions. However, the ESCB now favours requirements based on how quickly reserve assets can be made available. ECB research has also identified possible contagion between stablecoins and banks when large deposits move suddenly.
MiCA keeps the existing deposit floors unless EU lawmakers approve an amendment. ESMA states that e-money token issuers must place at least 30% of received funds in credit institutions. Significant issuers face stricter requirements under the wider EU stablecoin regulation.
Tether Links MiCA Stablecoin Reserve Rule to License Decision
Tether has long objected to the MiCA stablecoin reserve rule and has not sought EU authorization for USDT. Chief executive Paolo Ardoino previously argued that large uninsured bank deposits could increase reserve risks. He cited the 2023 Silicon Valley Bank failure when explaining Tether’s position.
USDT later lost support on several regulated European trading platforms after MiCA requirements took effect. Tether has kept much of its reserves in short-term U.S. government securities instead of European bank deposits. The MiCA stablecoin reserve rule remains unchanged while the Commission reviews the ESCB recommendation.
The ESCB also raised enforcement concerns because non-compliant crypto firms can still reach EU customers. It separately opposed multi-issuance structures that treat EU and non-EU stablecoins as interchangeable. The Commission consultation forms part of the broader MiCA review process.
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