European Central Bank Proposes Elimination of MiCA's Stablecoin Reserve Requirement

The European Central Bank (ECB) has formally requested the European Commission to remove a key provision from the Markets in Crypto-Assets (MiCA) regulation that mandates stablecoin issuers to hold a significant portion of their reserves in bank deposits. This recommendation was made in response to concerns that the current requirement exacerbates risks within the banking system.

As it stands, MiCA requires issuers of e-money tokens and asset-referenced tokens to maintain a minimum percentage of their reserves in traditional bank deposits—30% for non-significant tokens and 60% for significant ones. The ECB argues that this rule exposes banks to volatile deposits, which could lead to instability if a stablecoin experiences a surge in redemptions.

Instead of fixed deposit mandates, the ECB is advocating for a liquidity-focused approach, suggesting that reserve assets should be required to mature within one to five working days. This shift would prioritize the accessibility of funds over their location, allowing issuers greater flexibility in managing their reserves.

The ECB's proposal comes as MiCA is set to fully take effect in 2024 and 2025, making Europe a pioneer in establishing a comprehensive regulatory framework for crypto assets. The current bank-deposit rule has faced criticism from industry groups, which argue that it creates systemic vulnerabilities by tying the stability of stablecoins to specific banking relationships.

Additionally, the ECB highlighted enforcement challenges, noting that non-compliant platforms operating outside the EU could still reach European users, undermining regulatory efforts. The proposed changes could significantly impact stablecoin issuers, potentially lowering compliance burdens and enhancing revenue opportunities by allowing for more lucrative reserve management strategies.

New Developments in MiCA Regulation

• The European Central Bank (ECB) has formally responded to the European Commission's review of the Markets in Crypto-Assets Regulation (MiCA) on September 22, 2026.
• The ECB is advocating for the retention of the ban on interest payments for stablecoins and the introduction of new liquidity-based reserve requirements.
• A proposed liquidity-bucket model would require stablecoin issuers to hold a defined share of reserve assets that must mature within one to five working days.
• The ECB has identified "material challenges" in enforcing existing rules, particularly concerning compliance among crypto firms operating within the EU.
• New powers are proposed to specifically target tokens pegged to non-euro currencies to mitigate systemic risks to eurozone financial stability.
• The MiCA review process is ongoing, and the ECB's submission serves as input rather than final policy decisions.

New Developments from the European Central Bank

• The European Central Bank (ECB) emphasizes the importance of digital innovation for banks' resilience, urging them to digitize thoughtfully to remain competitive.
• Cyber incidents among major banks doubled between 2022 and 2024, prompting the ECB to implement a multi-pronged strategy that includes new regulations and a sovereign digital currency.
• The Digital Operational Resilience Act (DORA) became applicable in January 2025, requiring banks to manage ICT risks and report major incidents.
• In 2025, 38% of bank incidents were linked to IT changes, highlighting vulnerabilities created by modernization efforts.
• The ECB's digital euro project aims to complement, not replace, commercial bank deposits, with limited expected impact on bank liquidity.
• Estimated costs for implementing the digital euro range from 4 billion to 5.8 billion euros over four years.
• The Pontes project, launched in September 2026, facilitates wholesale tokenized asset transactions settled in central bank money, enhancing institutional credibility and reducing counterparty risk.
• Euro area banks maintain a strong position with a Common Equity Tier 1 ratio of 16.1%, projected to remain at 12.0% under stress test conditions by Q3 2025.
• The non-performing loan ratio is currently at 1.9%, which is historically low for Europe.

New Developments in European Central Bank Regulations

European central banks are pushing to extend the ban on stablecoin yields to include crypto lending and staking activities. This move is part of a broader effort to tighten control over the crypto sector in Europe.

The proposed expansion of the ban reflects ongoing concerns regarding financial stability and investor protection within the EU's digital asset landscape.

Market sentiment appears to be negatively impacted, particularly for Ethereum, which shows reduced odds of reaching higher price levels by the end of 2026.

Key actors in the crypto space, including the Ethereum Foundation and major exchanges, may respond to these regulatory changes, influencing market perceptions and activity.

Market participants are advised to monitor any formal announcements from European financial regulators regarding this regulatory development.