ECB and EU Central Banks Push MiCA Changes on Stablecoin Deposit Caps

The European System of Central Banks (ESCB) is pushing to loosen parts of the upcoming MiCA framework governing how stablecoin issuers hold reserves. In a response published this Tuesday to the European Commission’s review of the Markets in Crypto-Assets Regulation (MiCA), the ESCB argues that mandatory requirements tying stablecoin reserves to bank deposits could generate liquidity stress for banks during periods of rapid redemption.

Instead of insisting that issuers keep a fixed share of reserves parked in deposits at credit institutions, the ESCB proposes replacing the bank-deposit thresholds with liquidity rules calibrated to how quickly reserve assets can be used—specifically focusing on assets maturing within one and five working days. The ESCB also points to instruments such as overnight reverse repurchase agreements (repos) and short-term sovereign bonds as potential reserve tools.

Key takeaways

• The ESCB wants to replace MiCA’s fixed bank-deposit reserve requirements with liquidity requirements based on time-to-maturity (one and five working days).
• ESCB warns that a stablecoin run could force fast withdrawals from banks, potentially exposing credit institutions to liquidity problems.
• The proposal aligns with earlier draft liquidity “buckets” developed by the European Banking Authority (EBA) in 2024.
• Central banks also caution that MiCA enforcement gaps could allow non-compliant firms to keep serving EU customers.
• The risk debate echoes concerns raised by stablecoin issuers, including Tether’s CEO, about MiCA’s deposit-linked approach.

From deposit floors to liquidity time buckets

At the heart of the ESCB’s proposal is a shift in how reserve adequacy is measured. The current MiCA-related approach requires a minimum proportion of stablecoin reserves to be held as deposits at credit institutions—30% for standard stablecoins and 60% for “significant” stablecoins.

In its published response to the European Commission’s MiCA review, the ESCB argues this model creates what it describes as a direct link between stablecoin issuers and banks. That linkage matters, the ESCB says, because if holders redeem at pace, issuers may need to withdraw deposited funds quickly—behavior that can strain bank liquidity at exactly the moment it is most needed.

To reduce that dependency, the ESCB backs liquidity requirements that focus on reserve assets’ maturity horizons. Under the new direction, issuers would have to hold minimum liquidity amounts among reserve assets maturing within defined short periods, rather than meeting a mandated share in the form of bank deposits.

How the ESCB’s alternative aligns with EBA drafts

The ESCB’s framing references draft rules from the European Banking Authority (EBA) that were published in 2024. Those drafts outline distinct liquidity thresholds for stablecoin reserves depending on whether a token is classified as “significant” or “non-significant.”

According to the EBA draft rules cited by the ESCB, significant stablecoins would be required to hold at least 40% of reserves in assets maturing within one working day and at least 60% in assets maturing within five working days. For non-significant tokens, the draft thresholds are 20% for one working day and 30% for five working days.

The ESCB’s Tuesday response suggests that, operationally, liquidity can be achieved without the rigid deposit framework—highlighting overnight reverse repurchase agreements and short-term sovereign bonds as examples of instruments that can help issuers meet near-term liquidity targets.

Why central banks see systemic two-way risks

The ESCB does not treat the risk as one-directional. While it emphasizes that stablecoin redemption pressure could pull liquidity out of banks, it also warns that bank stress can spill into stablecoin reserves.

As part of that argument, the ESCB points to the March 2023 collapse of Silicon Valley Bank. In the aftermath, a run on Circle’s USDC stablecoin followed disclosures that Circle had held $3.3 billion of its reserves at the failed institution. The ESCB uses this episode to illustrate how concentration of reserve funds in a single credit institution—and the resulting loss of confidence—can translate quickly into stablecoin redemption pressure.

Taken together, the ESCB’s approach implies that reserve rules should aim to reduce both the need for rapid bank-linked withdrawals during stablecoin stress and the vulnerability of stablecoins to bank-specific failure events.

MiCA enforcement challenges beyond reserve rules

Beyond the mechanics of reserve holding, the ESCB also cautioned that MiCA’s implementation may face “material challenges” in enforcement. The concern, as expressed in the response, is that even firms that fail to comply with MiCA requirements could still reach or continue serving EU customers.

That point broadens the discussion beyond liquidity buffers. Investors and users have largely focused on whether reserves are safe and liquid; central banks are effectively arguing that safety depends not only on what reserves look like, but also on whether the regulatory framework is implemented and enforced in a way that prevents non-compliant entities from operating inside the EU market.

Stablecoin industry warnings were already on the record

The ESCB’s position also echoes arguments made by stablecoin industry figures. In an October 2024 interview with Cointelegraph, Tether CEO Paolo Ardoino warned that MiCA’s bank-deposit reserve requirement could create systemic risks for both banks and issuers.

Ardoino illustrated the concern with a hypothetical example: if a stablecoin issuer had €10 billion in reserves and €6 billion had to be kept as bank deposits, then if a bank lent out 90% of those deposited funds, only €600 million might remain readily available. In a scenario where the issuer needed billions quickly to meet redemptions, that mismatch between depositor availability and redemption demands could contribute to a liquidity crunch.

In its Tuesday response, the ESCB references a similar dynamic—stating that a stablecoin run could force an issuer to withdraw deposits rapidly and that the impact could be most acute when stablecoin reserves represent a meaningful share of a bank’s funding.

With the ESCB’s response now on the record, the key next question is how the European Commission will balance MiCA’s original bank-deposit intent with the liquidity-time-bucket approach advocated by central banks and aligned with EBA draft rules. Readers should watch for how the final MiCA implementation details handle both liquidity measurement and enforcement capacity—especially during periods of market stress when reserve behavior is tested in real time.