ECB and EU Central Bank Oppose Stablecoin Bank Deposit Reserve Requirements

TechFlow, September 22 — According to Reuters, the European System of Central Banks (ESCB), comprising the European Central Bank (ECB) and the national central banks of EU member states, has responded to the public consultation on the MiCA crypto regulation. The ESCB opposes the current requirement mandating that stablecoin issuers hold at least 60% of reserve assets in bank deposits, arguing that this would expose banks to stablecoin market volatility risks and reduce deposit stability. The ESCB recommends revising the relevant requirement to stipulate that a certain proportion of reserve assets must be held in short-term assets maturing within one to five business days. Additionally, the ESCB noted that European regulators face "significant challenges" in enforcing crypto regulations, as non-compliant crypto firms can still access EU users, posing a risk to investor protection.