ECB, EU central banks oppose stablecoin bank deposit rule

EU central banks, including the European Central Bank (ECB), have expressed concerns against a proposed EU regulation that mandates stablecoin issuers to keep a substantial portion of their reserves in traditional bank deposits. The European System of Central Banks (ESCB), comprising the ECB and 27 national central banks of EU countries, argued that such a requirement could expose lenders to volatility in the stablecoin market and result in less stable deposits.

The central banks proposed an alternative approach to MiCA regulations, which came into effect last year. Instead of requiring major stablecoin issuers to hold 60% of their reserves as bank deposits, they suggested that the minimum percentage of token reserves should be held in assets that mature within one or five working days. This recommendation aims to provide a more stable and less volatile reserve structure for stablecoin issuers.

Moreover, the central banks highlighted the challenges EU regulators face in enforcing crypto regulations. They pointed out that non-compliant crypto companies continue to have access to EU customers, raising concerns about investor protection.