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The European Central Bank and the EU's national central banks want crypto platforms barred from offering lending, borrowing, staking or other products that generate indirect returns on stablecoin holdings. In a 57-page response to the European Commission's consultation on reviewing the Markets in Crypto-Assets regulation, the European System of Central Banks said it "continues to support the prohibition on CASPs paying remuneration on stablecoins" and that the ban should extend beyond MiCA-governed services to unregulated activities, including crypto lending, borrowing and staking.
"Electronic money is intended to be used for making payments and not as a means of saving," the ESCB argued, warning that layered structures can transform stablecoins into yield-bearing arrangements that circumvent the direct-remuneration ban and blur the line between e-money and bank deposits, distorting competition across the EU financial system. "Maintaining and, where necessary, strengthening the prohibition, covering both direct and indirect forms of remuneration, should be a clear legislative priority."
Why it matters
The position echoes the fight at the heart of the U.S. Clarity Act, where eight banking groups urged senators to tighten restrictions on stablecoin rewards before the bill failed a 49-50 procedural vote. If the ECB's framing prevails in Brussels, the core DeFi-adjacent business models for stablecoins in Europe, lending and staking, would face an explicit legislative wall.
The central banks also proposed scrapping MiCA's requirement that issuers hold 30% of reserves as bank deposits, rising to 60% for significant stablecoins, arguing large stablecoin deposits are an unstable funding source that exposes lenders to sudden withdrawals during a run. They instead want liquidity rules based on conversion speed, pointing to draft EBA standards requiring significant stablecoins to hold 40% of reserves in assets maturing within one day and 60% within five working days.
Frequently asked questions
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What do European central banks want to ban on stablecoins?
The ECB and the EU's national central banks want crypto platforms barred from offering lending, borrowing, staking or other products that generate indirect returns on stablecoin holdings, extending MiCA's ban on direct remuneration to unregulated activities.
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Why do central banks object to yield-bearing stablecoin structures?
They argue lending and staking can transform stablecoins into yield-bearing arrangements that circumvent the remuneration ban, blur the distinction between electronic money and bank deposits, and distort competition in the EU financial system.
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What change is proposed for stablecoin reserve requirements?
The ESCB proposed replacing MiCA's requirement that issuers hold 30% of reserves as bank deposits (60% for significant stablecoins) with liquidity rules based on how quickly reserve assets convert into cash, such as draft EBA thresholds of 40% maturing within one day.
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How does this relate to the U.S. Clarity Act dispute?
The ECB's position echoes a dispute central to the Clarity Act debate, where eight U.S. banking groups urged senators to tighten restrictions on stablecoin rewards that compete with bank deposits; the bill failed a 49-50 procedural vote.
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What stage is the proposal at in the EU legislative process?
It was submitted as a 57-page ESCB response to the European Commission's consultation on reviewing the MiCA regulation, which began taking effect in June 2024; the Commission's review will determine whether the language becomes legislative text.
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