ECB Proposes Replacing MiCA 30% Stablecoin Bank Deposit Rule
The ECB seeks to swap mandatory bank deposit thresholds for short-term liquidity requirements to mitigate systemic risk.
Key points
- The ECB proposes removing the 30% minimum bank deposit requirement for stablecoin reserves under MiCA.
- New rules would mandate liquidity from assets maturing within one or five working days instead.
- Tether CEO Paolo Ardoino supported the change, citing previous warnings about systemic bank risks.
The European Central Bank proposes eliminating the requirement for stablecoins to hold 30% of reserves in bank deposits. This change aims to prevent liquidity crises within the banking sector.
Regulators argue that current rules create a dangerous direct link between issuers and credit institutions. Large sudden withdrawals during a stablecoin run could destabilize individual banks.
Liquidity buckets replace deposit mandates
The ESCB recommends minimum liquidity thresholds for assets maturing within one or five days. This approach separates stablecoin reserves from the core funding base of commercial banks.
Issuers would use overnight reverse repos and short-term sovereign bonds to meet these new standards. These instruments provide immediate access to cash without relying on bank deposits.
Industry warnings align with central bank fears
Tether CEO Paolo Ardoino warned in 2024 that high deposit requirements create systemic risks. His comments predicted the specific liquidity failures now cited by European regulators.
Ardoino explained that banks lend out most deposited funds, leaving little liquidity for emergencies. This structural weakness could trigger a crunch if issuers need to redeem tokens quickly.
Past bank failures highlight contagion risks
The collapse of Silicon Valley Bank in 2023 demonstrated how bank failures spread to crypto assets. Circle lost access to 3.3 billion dollars in reserves held at the institution.
TradingView reported that the ECB now cites this event as evidence of two-way risk transmission. The central banks seek to break this dangerous interdependence between the two sectors.
