TL;DR:
- The ECB and EU central banks propose replacing stablecoin deposit thresholds in MiCA with tiered liquidity requirements.
- The European System of Central Banks warns that large reserve deposits in commercial banks could generate systemic risks in the event of a massive redemption run.
- Tether CEO Paolo Ardoino backed the proposal and recalled that his company rejected a European license over the clause the ESCB now seeks to eliminate.
The European Central Bank and the central banks of the European Union submitted a formal proposal to amend one of the pillars of the MiCA regulation: the bank deposit requirements on stablecoin reserves.
The initiative was published in response to the European Commission’s review of MiCA. Its objective is to replace the current thresholds with minimum tiered liquidity requirements based on maturities of one and five business days.
MiCA and Its Thresholds Come Under Review
The European System of Central Banks, known as the ESCB, called for eliminating the rule that requires issuers to hold at least 30% of their reserves in bank deposits, a percentage that rises to 60% for stablecoins deemed significant. In its place, the body backed alternative instruments such as overnight reverse repurchase agreements and short-term sovereign bonds, tools that provide liquidity without concentrating risk in specific credit institutions.
The ESCB’s central argument is that the current rule creates a direct link between issuers and credit institutions, which could destabilize a bank if a run forces the issuer to withdraw deposits abruptly. The body cited the preliminary rules published by the European Banking Authority in 2024, which already established differentiated liquidity thresholds based on token category.
Stablecoins, Banks and the Silicon Valley Bank Precedent
The ESCB recalled the collapse of Silicon Valley Bank in March 2023, which triggered a run on USDC after Circle disclosed that $3.3 billion of its reserves were deposited at that institution. That episode illustrates with precision the two-way risk that concerns European regulators: both the bank and the issuer are left exposed.
Paolo Ardoino, CEO of Tether, had warned about this scenario since at least 2024, describing a hypothetical case where a stablecoin with €10 billion in reserves, of which €6 billion had to remain in banks, could suffer a liquidity crisis if the institution only kept 10% available.
Following the ECB’s announcement, Ardoino commented that Tether declined to obtain a European license precisely because of the clause the ESCB now proposes to eliminate.
