ECB Seeks Ban on Stablecoin Yield, Shifting Reserve Rules to Liquidity
European central banks demand a ban on indirect stablecoin yields and propose new liquidity-based reserve rules.
Key points
- The ESCB wants to ban indirect stablecoin yields from lending and staking to protect bank deposits.
- Proposed rules replace the 30% to 60% deposit requirement with liquidity-based maturity thresholds.
- Regulators argue that yield-bearing stablecoins distort competition by blurring the line between payments and savings.
The European System of Central Banks wants to ban indirect stablecoin yields. This move targets lending and staking structures that mimic bank deposit interest.
Regulators argue these products blur the line between electronic money and savings. They fear this distortion will undermine competition in the EU financial system.
Banning indirect yield structures
The ESCB submitted a 57-page response to the European Commission. It urges lawmakers to expand the MiCA ban on stablecoin remuneration.
Current rules cover direct payments but miss indirect returns. The central banks say lending and staking must be included.
According to CoinDesk, the ECB stated that electronic money is for payments. It should not function as a means of saving.
Reserve rules shift to liquidity
The proposal replaces the 30% to 60% bank deposit requirement. Instead, it mandates reserves based on asset conversion speed.
Central banks warn that stablecoin deposits can become unstable bank funding. Sudden withdrawals during a run could strain lenders.
New standards would require assets maturing within one to five days. This shifts focus from location to liquidity availability.
Global regulatory parallels emerge
This debate mirrors the recent Clarity Act dispute in the U.S. Eight banking groups urged senators to tighten stablecoin reward restrictions.
