Europe Rethinks Stablecoin Reserves
Why the ECB Wants MiCA’s Bank-Deposit Rule Changed
Published: 27 September 2026
Category: Stablecoins & Payments • Regulation • Digital Finance
By: Akinyele Oluwale
Executive Summary
Europe’s central banks are challenging a central feature of the European Union’s stablecoin regulatory framework.
Under the Markets in Crypto-Assets Regulation, known as MiCA, stablecoin issuers must presently hold at least 30% of certain reserve assets as deposits with credit institutions. That threshold can rise to 60% for stablecoins classified as significant.
The European Central Bank and EU national central banks have reportedly recommended replacing this fixed bank-deposit requirement with a more flexible liquidity standard focused on assets that can mature or be converted into cash within one to five working days.
Their concern is not that stablecoin reserves are unnecessary. The concern is that forcing issuers to concentrate large amounts of reserve money in commercial banks could create a new source of unstable bank funding.
This is still a regulatory recommendation not an enacted amendment to MiCA. Nevertheless, it represents an important shift in how European authorities are thinking about stablecoin risk.
The debate is moving from a simple question
“Are the reserves safely held?”
—to a more sophisticated one—
“Can the reserves generate immediate liquidity without transmitting stress into the banking system?”
Why This Matters
Stablecoins promise holders that their tokens can be redeemed at or close to their reference value.
That promise depends on three conditions:
1. The reserve assets must exist.
2. The assets must be sufficiently safe.
3. The issuer must be able to convert them into cash quickly during heavy redemptions.
A reserve portfolio can appear financially sound while still creating liquidity problems.
For example, if an issuer holds billions of euros in bank deposits, those deposits may look liquid from the issuer’s perspective. But for the receiving banks, they can become concentrated and potentially volatile liabilities.
If stablecoin holders begin redeeming simultaneously, the issuer may withdraw substantial deposits from its banking partners. A problem that begins in the digital-asset market could therefore place pressure on conventional bank funding.
The ECB’s argument is that regulation should consider the stability of the entire financial system not merely the balance sheet of the stablecoin issuer.
What Happened?
MiCA established a harmonised European regulatory framework for crypto-assets, including asset-referenced tokens and electronic-money tokens.
Its reserve rules require relevant issuers to maintain at least 30% of reserve assets as deposits with credit institutions. For significant tokens, the minimum can increase to 60%.
The ECB and EU national central banks have now recommended removing the fixed minimum-deposit rule.
Their proposed direction would instead require issuers to hold an appropriate portion of reserves in assets capable of maturing within one to five working days.
This would shift the regulatory emphasis from the legal form of an asset such as a bank depositnto its practical liquidity under stressed market conditions.
European authorities have also maintained their concerns about multi-issuance arrangements in which stablecoins issued inside and outside the EU are treated as interchangeable.
Such structures could allow redemption pressure originating outside Europe to affect reserves located within the EU. The European Systemic Risk Board has previously described third-country multi-issuer arrangements as containing built-in vulnerabilities requiring an urgent policy response.
The Bigger Picture
Stablecoins are becoming part of the broader financial system.
They are increasingly used for:
- Crypto-asset settlement;
- Cross-border transfers;
- Digital commerce;
- Tokenised securities;
- Decentralised finance;
- Exchange liquidity; and
- Institutional payment infrastructure.
As their scale increases, stablecoin reserves can no longer be treated as funds sitting outside the banking system.
The reserves are commonly invested in bank deposits, government securities and other short-term instruments. Stablecoin growth can therefore change the distribution of liquidity across banks and sovereign-debt markets.
This creates a regulatory dilemma.
Requiring more bank deposits may reduce the issuer’s exposure to market-price volatility. However, it may also concentrate reserves in a limited number of banks and expose those institutions to sudden withdrawals.
Holding more short-dated government securities could reduce dependence on commercial banks, but it introduces different considerations including market liquidity, settlement arrangements and the issuer’s ability to sell or redeem assets rapidly.
There is no completely risk-free reserve structure. Regulation must determine where risk is located, how it can spread and who is responsible for managing it.
Market Impact
For stablecoin issuers
A revised rule could provide greater flexibility in reserve management.
Issuers may be able to allocate more reserves to short-duration government instruments and other highly liquid assets instead of maintaining a fixed percentage in bank deposits.
That could improve diversification and potentially increase reserve income. However, issuers would face greater responsibility for liquidity modelling, stress testing and maturity management.
For commercial banks
Banks could receive a smaller proportion of stablecoin reserves.
This may reduce a potential source of deposits, but it could also protect banks from becoming dependent on funds that can leave rapidly during a redemption event.
For government-debt markets
Greater use of short-dated sovereign instruments could increase stablecoin issuers’ role in European money markets.
As the sector grows, reserve-allocation decisions could become increasingly important for demand at the short end of the yield curve.
For investors and token holders
The critical issue is not simply whether reserves are described as “safe.”
Investors should examine:
- The composition of the reserve;
- The maturity profile;
- Custodian concentration;
- Redemption arrangements;
- Frequency of reserve disclosures;
- Independent attestations; and
- Performance during liquidity stress.
A token’s stability ultimately depends on the quality and accessibility of the assets supporting it.
Editorial Perspective
The ECB’s concern is economically credible.
A rigid rule can create the appearance of safety while concentrating risk elsewhere in the financial system. Requiring stablecoin issuers to place a large percentage of reserves in banks does not automatically make those reserves systemically safer.
The correct objective should be resilient redemption capacity.
That requires a reserve framework built around liquidity, diversification, transparency and credible stress testing not merely compliance with a fixed deposit percentage.
However, removing the minimum bank-deposit requirement must not become an excuse for issuers to pursue higher yields by moving into riskier or longer-duration assets.
Any revised framework should include:
- Strict limits on credit and duration risk;
- Clear diversification requirements;
- Daily liquidity-management standards;
- Regular independent reserve verification;
- Credible redemption stress tests; and
- Transparent disclosure of reserve composition.
The reform should improve liquidity without weakening reserve quality.
What to Watch Next
Investors and financial institutions should monitor five developments:
1. Whether the European Commission accepts the recommendation
The proposal has not yet changed MiCA. Formal legislative or regulatory action would still be required.
2. The definition of qualifying liquid assets
The strength of any new framework will depend on which instruments qualify and how quickly they must mature.
3. Treatment of significant stablecoins
Regulators may retain stricter requirements for tokens whose scale could create systemic consequences.
4. Rules governing multi-issuance structures
Europe may impose stronger safeguards on stablecoins issued simultaneously within and outside the EU.
5. Enforcement of MiCA
A sophisticated regulatory framework has limited value if non-compliant providers can continue serving European customers.
Key Takeaways
- MiCA currently requires relevant stablecoin issuers to hold at least 30% of reserves as bank deposits, rising to 60% for significant tokens.
- European central banks believe this requirement could expose banks to volatile stablecoin-related funding.
- They are proposing a greater focus on assets that can generate liquidity within one to five working days.
- The recommendation does not yet constitute a change in European law.
- Investors should evaluate reserve liquidity, maturity and concentration not merely the headline value of reserves.
- The future of stablecoin regulation will increasingly be shaped by its interaction with the traditional banking and sovereign-debt systems.
About Akinyele Oluwale & Co. Investment Ltd.
Akinyele Oluwale & Co. Investment Ltd. provides independent intelligence and strategic analysis across digital assets, stablecoins, tokenisation, artificial intelligence, institutional finance and global macroeconomics.
Our objective is to help investors, businesses and policymakers understand how emerging financial technologies are reshaping markets, capital formation and the global economy.
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