European Central Banks Call for New Stablecoin Yield Restrictions: Which Products Are Targeted?
The European Central Bank and the EU’s national central banks want lending, borrowing, and staking products that provide stablecoin holders with indirect yield to also be covered by the yield ban.
According to CoinDesk, the European System of Central Banks (ESCB) submitted a 57-page response to the European Commission’s consultation on its review of the Markets in Crypto-Assets Regulation (MiCA). The system, which consists of the European Central Bank and the national central banks of EU countries, is calling for the ban on stablecoin yield to be strengthened if necessary.
This is not a new ban that has come into force; it is a regulatory proposal submitted by central banks as part of the legislation review.
Not only direct interest but also indirect yield is targeted
The ESCB said it supports the existing ban on crypto-asset service providers paying yield to stablecoin holders. In its view, this restriction should not be limited to the services currently regulated under MiCA; it should also cover crypto lending, borrowing, staking, and similar structures that provide indirect gains through stablecoins.
Central banks argue that turning stablecoins into products that generate yield through these services could allow the direct yield ban to be circumvented. The request is not to ban staking activities involving all crypto assets, but to also restrict arrangements that provide indirect yield on stablecoin balances.
The ESCB’s rationale is based on the view that electronic money should be used for payments rather than savings. The institution says indirect yield could blur the distinction between electronic money and bank deposits and distort competitive conditions between banks and crypto platforms.
Requirement for bank deposits in reserves could also change
The central banks’ second proposal concerns stablecoin reserves. Under the current MiCA rules summarized by CoinDesk, issuers are required to hold at least 30% of their reserves in deposits with credit institutions; for stablecoins classified as significant, the ratio rises to 60%.
The ESCB wants these minimum deposit requirements to be replaced with rules based on holding certain portions of reserves in assets maturing within 1–5 business days. This would shift the focus from which institution holds the reserves to how quickly they can be accessed.
The rationale is that stablecoin issuers could rapidly withdraw their bank deposits in the face of heavy redemption demands. Central banks view such large deposits as an unstable source of funding for banks.
Under the draft standards of the European Banking Authority cited as a reference, at least 40% of reserves for significant stablecoins would be required to mature within one day and 60% within five business days. For those not considered significant, the thresholds are 20% and 30%, respectively. These are not separate tranches to be added together, but the shares of reserves that would mature within the specified periods; the proposal is not yet a finalized amendment to MiCA.