European central banks seek tougher MiCAR rules for stablecoins and crypto
The ECB and EU central banks urge changes to MiCA, saying stablecoin bank deposit rules could expose lenders to more volatile funding.
Europe’s central banks are seeking a major update to the Markets in Crypto-Assets Regulation (MiCAR), proposing new stablecoin liquidity requirements, stronger EU-level supervision of crypto firms and tighter restrictions on multi-issuer tokens involving entities outside the bloc.
The European System of Central Banks said in its September submission to the European Commission that MiCAR remains a “robust, balanced and harmonized” framework but is already showing gaps as tokenization, global stablecoins and multi-function crypto groups develop.
The ESCB said crypto-asset service providers should be authorized, supervised and sanctioned by the European Securities and Markets Authority (ESMA) rather than through separate national regulators.
Major crypto-asset service providers (CASPs) should also face additional capital requirements, establish an EU intermediate parent company and be brought within a consolidated prudential perimeter that covers multi-function groups.
Stablecoin rules
On stablecoin reserves, the ESCB proposes replacing MiCAR’s bank-deposit floor with liquidity buckets requiring minimum portions of reserves to be held in assets maturing within one and five working days. It said EBA’s pending technical standards should provide the baseline, with additional diversification requirements added.
The central banks want to retain the ban on paying interest on e-money tokens and asset-referenced tokens.
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Banks should remain able to issue EMTs directly from their balance sheets or through e-money subsidiaries, although supervisors should be able to require the subsidiary structure for certain third-country multi-issuer arrangements, as noted in the paper.
Offshore tokens and central bank money
The ESCB backs the European Systemic Risk Board’s concerns about third-country multi-issuer stablecoins, saying they pose financial stability risks. If lawmakers permit them in the future, MiCAR should include equivalence tests and strong safeguards.
The central banks also want crisis-management rules for non-bank stablecoin issuers written directly into law.
The ESCB said euro-denominated EMTs could support cross-border payments but should not become a wholesale settlement asset where tokenized central bank money or tokenized bank deposits are available.
It also opposed allowing non-bank EMT issuers to safeguard customer funds at central banks, arguing that full central-bank backing could create a synthetic CBDC and increase deposit-flight risks.
Tokenized central bank money from the Eurosystem’s Pontes and Appia projects should instead remain a risk-free anchor of the financial system. The ESCB also opposes bringing tokenized securities and deposits under MiCAR, saying they should remain under MiFID and CRR/CRD respectively.