Crypto
Home›Crypto›Regulation›EU central banks seek to change MiCA stablecoin reserv…
EU central banks seek to change MiCA stablecoin reserve deposit rules
Under the current MiCA setup, issuers of reserve-backed tokens must hold a fixed share as deposits with EU banks, but the European System of Central Banks wants the minimum removed and reserve accessibility tested over one to five working days.
Europe’s central banks are urging the EU to revisit a Markets in Crypto-Assets (MiCA) rule meant to make stablecoin reserves safer, warning it can also tie token runs to stress in the banking system, according to reporting by CryptoSlate.
The rule in question requires issuers of non-significant reserve tokens to keep at least 30% of reserves as deposits with EU credit institutions, and 60% for significant tokens, as reflected in European Banking Authority technical standards. Reuters and Cinco Días reported Sept. 22 that the European System of Central Banks wants the fixed minimum removed, keeping deposits eligible but making reserve safety depend on how much can become cash within one or five working days.
The European System of Central Banks position is part of the European Commission’s MiCA review, with a consultation running through Sept. 30, and the Commission saying responses may inform a later legislative proposal. CryptoSlate notes that while bank deposits give issuers cash for redemptions, deposits are also claims on banks, and reserve quality can become dependent on the institutions holding that money.
The article highlights how bank-access uncertainty can affect stablecoin pegs, citing a March 2023 episode where Circle held part of USDC’s reserves at Silicon Valley Bank, and an ECB analysis that found USDC’s market capitalization fell 26% over a month. It also cites ECB material describing how redemptions could force issuers to withdraw reserves and pressure bank liquidity, including the risk that issuers concentrate deposits among a small number of banks.