ECB Proposes Ban on Indirect Stablecoin Yield
The European Central Bank urges lawmakers to close loopholes allowing stablecoin holders to earn returns via lending and staking.
Key points
- The ECB proposes banning indirect stablecoin yield from lending, borrowing, and staking arrangements.
- Regulators want to replace fixed bank deposit reserve rules with liquidity-based maturity limits.
- The goal is to keep stablecoins strictly for payments and prevent them from acting as savings.
The European Central Bank seeks to extend the ban on stablecoin interest to cover lending and staking. This move aims to prevent token holders from earning indirect yield through financial arrangements.
Regulators argue that electronic money must remain a payment tool rather than a savings product. The proposal responds to a review of the Markets in Crypto Assets framework.
Closing the Yield Loophole
Current rules prohibit issuers from paying direct interest on stablecoins. However, holders can still generate returns by lending tokens or staking them in pools.
The European System of Central Banks warns that these structures blur the line between crypto and bank deposits. They want legislation to explicitly ban all forms of remuneration on stablecoins.
Reserve Requirements Face Overhaul
The ECB also proposes removing the fixed requirement for issuers to hold bank deposits. Current law mandates that 30% or 60% of reserves be kept as credit institution deposits.
Instead, regulators want liquidity-based rules that require assets to mature within five working days. This shift aims to reduce concentration risk in the banking sector.
Regulatory Context and Impact
The Cryptonomist reports that this stance mirrors similar efforts in the United States. Banking groups there are also pushing to tighten rules on stablecoin rewards.
If adopted, the changes will redefine how stablecoins are treated under EU law. The distinction between payment instruments and investment products will become sharper.
