⏱ 2 min read
Central banks warn MiCA’s 30%–60% deposit rule ties issuers to bank liquidity risk; back EBA-style one- and five-day thresholds and the use of repos and short-dated sovereigns.
The European System of Central Banks (ESCB) has urged the European Commission to drop MiCA’s bank-deposit quotas for stablecoin reserves and replace them with hard liquidity thresholds. In a response published Tuesday to the Commission’s review of MiCA, the ESCB called for removing rules that require at least 30% of reserves (or 60% for significant tokens) to be held as bank deposits.
Instead, the ESCB backs minimum liquidity thresholds for assets maturing within one and five working days, pointing to European Banking Authority (EBA) draft levels: for significant stablecoins, at least 40% within one day and 60% within five; for non-significant, 20% and 30%, respectively. It highlighted overnight reverse repos and short-term sovereign bonds as instruments issuers could use to meet those buckets.
Why it matters
The ESCB argues that bank-deposit mandates create a tight link between issuers and credit institutions. In a redemption wave, issuers would need to pull large deposits quickly, pressuring banks that transform short-term deposits into longer-term loans. Liquidity buckets shift the burden toward market-based cash instruments—repos and sovereign bills—that can be liquidated without withdrawing funds from banks, reducing the risk of bank–stablecoin contagion.
The concerns echo those raised by the stablecoin industry. In an October 2024 Cointelegraph interview, Tether CEO Paolo Ardoino illustrated the issue with a hypothetical €10 billion reserve, €6 billion of which would be in bank deposits under a 60% mandate. If a bank lent out 90% of those deposits, only €600 million would be immediately available, potentially creating a liquidity crunch if the issuer suddenly needed billions for redemptions.
For issuers, the proposed shift would change reserve portfolios toward very short-dated, high-liquidity assets and away from uninsured deposits. For banks, it could reduce deposit volatility linked to crypto redemption cycles. The ESCB separately warned of “material challenges” enforcing MiCA across borders, noting that non-compliant firms can still reach EU customers.
What to watch next
The key variable is calibration. If the Commission adopts EBA-style one- and five-day thresholds and clarifies eligible instruments, issuers will need to prove daily and weekly liquidity rather than park large sums in deposits. Watch for the Commission’s review outcome, the EBA’s final technical standards, and issuer reserve disclosures detailing maturity buckets.
This content is for informational purposes only and does not constitute financial advice.
🧠 HafidWatch Take
The key change is a shift from relying on bank-deposit quotas to enforcing strict one- and five-day liquidity buckets, encouraging issuers to hold cash-like instruments instead of uninsured bank deposits. This approach aims to reduce the risk of bank–stablecoin contagion during runs. If the Commission adopts the EBA’s specified thresholds, redemptions will become more mechanical and less dependent on bank balance sheets. The critical factor remains calibration: small adjustments to liquidity buckets or eligible instruments will influence MiCA compliance costs for issuers and the extent of deposit volatility mitigation for EU banks.
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