ECB Challenges MiCA Reserve Rules, Calls for Ban on Interest-Bearing Stablecoins

The European Central Bank (ECB) and several EU national central banks have criticized the current MiCA framework, which requires stablecoin issuers to hold 60% of reserves in commercial banks, citing risks of bank runs. The ECB proposes that reserves be held in highly liquid assets maturing within 1-5 days. Furthermore, the ECB advocates for a strict ban on all forms of indirect stablecoin yields, including those from lending, borrowing, and staking, arguing that stablecoins should function solely as payment media rather than investment tools. The ECB also noted significant challenges in enforcing these standards against offshore, unlicensed entities targeting EU residents.