The European Central Bank and the European System of Central Banks are urging the European Commission to scrap a key Markets in Crypto-Assets (MiCA) rule requiring stablecoin issuers to hold up to 60% of reserves in bank deposits. Regulators argue this mandate exposes commercial banks to severe liquidity risks during token redemption waves. Instead, they propose liquidity-maturity rules. Meanwhile, Tether continues to reject EU licensing over the deposit rule, while central banks warn of ongoing challenges in blocking non-compliant offshore platforms.
MiCA bank-deposit mandate removal
- ▪On September 22, 2026, the European Central Bank and the European System of Central Banks submitted a formal response to the European Commission's consultation, recommending the complete elimination of the Markets in Crypto-Assets regulation's bank-deposit mandate for stablecoin reserves
- ▪Under the current Markets in Crypto-Assets regulation, stablecoin issuers must hold at least 30% of their reserves in bank deposits for non-significant tokens, and 60% for tokens classified as significant
Liquidity-based reserve requirements
- ▪The European System of Central Banks cited 2024 draft rules from the European Banking Authority that require significant stablecoins to hold at least 40% of reserves in assets maturing within one working day and 60% within five working days
- ▪The European System of Central Banks proposed replacing the Markets in Crypto-Assets bank-deposit mandate with minimum liquidity thresholds requiring reserve assets to mature within one to five working days
- ▪The European System of Central Banks backed alternative reserve instruments to achieve liquidity, specifically pointing to overnight reverse repurchase agreements and short-term sovereign bonds
Bank systemic stability risks
- ▪The European Central Bank and the European System of Central Banks argued that mandatory bank deposits expose commercial banks to liquidity risks, as a stablecoin redemption wave could rapidly drain those bank deposits held by stablecoin issuers overnight
- ▪The European Central Bank has separately warned that the expansion of euro-denominated stablecoins could squeeze commercial bank lending
Tether MiCA license refusal
- ▪Tether refused to seek a Markets in Crypto-Assets license in the European Union, with Chief Executive Officer Paolo Ardoino arguing since 2024 that the MiCA bank-deposit floor requiring issuers to hold up to 60% of reserves in bank deposits makes tokens less safe because EU deposit insurance is capped at 100,000 euros
- ▪Revolut dropped Tether's USDT stablecoin for its European customers in 2026, and Tether still holds no European Union authorization under the Markets in Crypto-Assets regulation
MiCA enforcement challenges
- ▪The European System of Central Banks stated that European regulators face material challenges in enforcing the Markets in Crypto-Assets regulation because non-compliant, offshore crypto platforms can still access European Union users
- ▪The European System of Central Banks warned that the continued access of non-compliant crypto platforms to European Union customers creates significant investor protection concerns
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