The European System of Central Banks (ESCB), including the ECB, is recommending revisions to the Markets in Crypto-Assets (MiCA) framework for stablecoins. Specifically, it proposes replacing MiCA’s current minimum requirement that stablecoin reserve holdings be kept as bank deposits with criteria based on liquidity levels.
Under the proposal, stablecoin issuers could meet the liquidity standard using instruments such as overnight reverse repurchase agreements and short-term sovereign bonds, rather than being required to hold a set minimum amount in bank deposits. The ESCB argues that this approach would better reflect the ability of reserves to cover redemptions, particularly during periods of stress.
The central banks also raise supervisory concerns about firms that do not comply with MiCA rules continuing to serve customers in the European Union, warning about the potential risks to consumers and market integrity. Cointelegraph and NDTV both report that the aim is to reduce the chance that sudden withdrawals could create strains for lenders while tightening expectations on compliant stablecoin reserve management.
