ECB and EU central banks oppose deposit requirement for stablecoins

The European Central Bank (ECB) and the national central banks of all 27 EU member states are calling on Brussels to scrap a MiCA requirement that stablecoin issuers keep a fixed share of their reserves in bank deposits. The central banks have warned that the rule could ultimately put pressure on the financial institutions it was designed to protect.

The proposal affects euro stablecoin issuers operating under the EU’s MiCA rules, as the European Commission continues its review of the framework.

The objection came from the European System of Central Banks (ESCB), which brings together the ECB and the 27 national central banks. The joint group submitted its opinion to the European Commission on September 22 and recommended the removal of the deposit thresholds.

The consultation remains open until September 30, and the current reserve requirements will remain in place for now.

The reserve rules the ECB wants gone

Under MiCA, stablecoin issuers regulated as electronic money institutions must currently keep at least 30% of their reserves as deposits with credit institutions. For tokens designated as “significant,” the required percentage is increased to 60%.

The ESCB wants both thresholds removed.

Instead, the central banks are proposing liquidity-based requirements that would focus on how quickly reserve assets can be converted into cash. Issuers could be required to hold a minimum share of reserves in assets that can be settled or converted to cash within one to five working days.

The ESCB specifically pointed to overnight repurchase agreements, or repos, and short-term government bonds as examples of assets that could qualify.

Why the ECB sees bank deposits as a risk

The central banks’ concern comes down to a difference in how the same deposit works for an issuer and a bank.

For a stablecoin issuer, cash sitting in a bank account is a liquid reserve. For the bank holding that money, however, this same deposit is a liability that could be withdrawn at any time.

This distinction becomes more important during a market shock. ECB analysis shows that banks assume they could lose 100% of deposits from electronic money institutions, compared with about 5% of a typical retail deposit.

A potential crypto sell-off could trigger repeated stablecoin redemptions, causing issuers to withdraw large amounts from commercial banks at the same time. The withdrawals would also be happening simulateneously and will not be spread out randomly because the crypto holders would be responding to the same market event.

The ECB estimates that a significant e-money token could fund redemptions equal to 60% of its supply through withdrawals from bank deposits alone before the need to sell any government debt.

Europe’s euro stablecoin market is still small

The concern is less about the market today than about how large it could potentially grow into.

The ECB estimated that the combined euro stablecoin market was worth about €450 million, or about  $516.1 million, in January 2026. That was up from around €50 million in early 2024.

Even after this level of growth, the market remains tiny compared with the roughly $300 billion in dollar-denominated stablecoins.

The ESCB is more interested in any future occurrences, and has warned that if a single token reached €50 billion in issuance and gained “significant” status, the current rules would require at least €30 billion to be held as bank deposits.

The ECB had already proposed possible safeguards for drafts in April to help spread stablecoin deposits across multiple banks and put a cap on each bank’s exposure. The ESCB says that it could reduce concentration, but it would not remove the potential risk of large withdrawals from banks if a wave of redemptions happens.

The smartest crypto minds already read our newsletter. Want in? Join them.