ECB Objects to MiCA Stablecoin Reserve Rules Amid Tether's Refusal
The European System of Central Banks (ESCB), including the ECB, has objected to a provision in the EU’s Markets in Crypto-Assets (MiCA) regulation that requires large stablecoin issuers to hold at least 60% of reserves in commercial banks. The central banks argue this rule could destabilize bank funding and expose lenders to sudden redemptions from token holders. They propose replacing it with a requirement for short-term, liquid assets instead. Tether, the issuer of USDT, previously rejected an EU license due to similar concerns over MiCA’s reserve requirements. Tether's CEO has argued that tying reserves in commercial banks makes stablecoins less safe and more vulnerable if those institutions fail. The company remains unlicensed under MiCA but is reportedly being lobbied by other firms for a regulatory shift. The European Commission is currently reviewing the rule as part of its consultation process, which closes on September 30. Until changes are made or approved, Tether will remain outside EU regulation.
Topics: ESCB EU crypto regulations European Central Bank (ECB) MiCA Tether