The European System of Central Banks proposed changing MiCA's liquidity rules for stablecoin issuers. It recommended removing fixed minimum shares of reserves held as bank deposits and replacing them with minimum holdings of highly liquid assets. Those assets would generally mature within one to five working days. The proposal has not been adopted and forms part of the European Union's review of its crypto-asset framework.
MiCA currently requires issuers to hold between 30% and 60% of reserve assets in bank deposits, depending on whether a token is classified as significant. The central banks said such deposits were meant to act as a liquidity buffer during periods of stress. The central-bank system argued that liquidity could also be maintained through instruments such as overnight reverse-repurchase transactions and short-term government bills.
DEPOSIT RISKS DRIVE REVIEW
The central banks said deposits from stablecoin issuers should not be treated as stable bank funding. Such deposits tend to be less stable and more sensitive to market conditions than the retail deposits they may replace. A sudden withdrawal could therefore transmit pressure from a stablecoin run to the banks holding its reserves.
The proposal also considered the economics of euro-denominated stablecoins. Bank deposits may generate less income than other eligible liquid instruments, reducing issuers' ability to sustain their businesses. The system said adequate profitability was needed to keep issuers sound and allow a competitive euro-denominated stablecoin market to emerge.
WIDER MICA CHANGES CONSIDERED
The central banks also sought clarification of the statutory audit requirement, stronger safeguards for foreign-currency stablecoins issued outside the EU and risk-sensitive own-funds requirements for issuers that also provide crypto-asset services. They reiterated opposition to paying interest on stablecoins and called for clearer treatment of crypto lending, staking and tokenised financial instruments. These recommendations extend beyond the reserve-composition question.
The next milestone is the European Commission's response after its consultation closes. Any change to MiCA would require the normal EU legislative process, so the current deposit thresholds remain applicable unless and until amended.