ECB and EU Central Banks Propose Replacing Stablecoin Deposit Thresholds with Liquidity Requirements

The European Central Bank (ECB) and EU central banks want to replace mandatory bank-deposit thresholds for stablecoin reserves with new liquidity requirements, arguing that large stablecoin deposits could create liquidity risks for banks.

The European System of Central Banks (ESCB) called for removing rules requiring at least 30% of reserves, or 60% for significant stablecoins, to be held as bank deposits. The proposal came in the ESCB’s response, published Tuesday, to the European Commission’s review of the Markets in Crypto-Assets Regulation (MiCA).

Instead of the existing bank-deposit rules, the ESCB backed minimum liquidity thresholds for reserve assets maturing within one and five working days. It separately pointed to overnight reverse repurchase agreements (repos) and short-term sovereign bonds as alternative instruments issuers could use to achieve liquidity.

The ESCB said the existing requirement “creates a direct link between issuers and credit institutions” and could expose banks to liquidity problems if a stablecoin run forces an issuer to rapidly withdraw deposits.

The central banks cited draft rules published by the European Banking Authority in 2024, requiring significant stablecoins to hold at least 40% of reserves in assets maturing within one working day and 60% within five working days. For non-significant tokens, the thresholds are 20% and 30%, respectively.

The ESCB also warned of “material challenges” in enforcing MiCA, saying non-compliant crypto companies can still access EU customers despite the bloc’s licensing regime.