ECB and EU Central Bank Oppose Stablecoin Bank Deposit Reserve Requirements

According to Reuters, the European System of Central Banks (ESCB), comprising the European Central Bank (ECB) and the national central banks of EU member states, has responded to the public consultation on the MiCA crypto regulations. The ESCB opposes the current rule requiring stablecoin issuers to hold at least 60 percent of reserve assets as bank deposits, warning that this would expose banks to volatility risks in the stablecoin market and undermine deposit stability. The ESCB recommends revising the requirement to stipulate that a defined proportion of reserve assets must be held in short-term assets maturing within one to five business days. Furthermore, the ESCB noted that European regulators face "significant challenges" in enforcing crypto regulations, as non-compliant crypto entities can still access EU users, creating vulnerabilities in investor protection.