TL;DR
- A new industry report says MiCA has produced euro stablecoins that are very safe but commercially weak and still marginal in global crypto activity today.
- The authors argue that full backing, zero interest, and deposit-heavy reserve rules have made euro EMTs less competitive than deposits and dollar tokens.
- Instead of rewriting MiCA entirely, they call for targeted reforms to reserves, remuneration, transparency, and limited central bank access during stress periods.
MiCA is starting to look like a paradox for Europe’s stablecoin ambitions: the framework may have made euro-denominated tokens safer, yet also too constrained to compete where crypto liquidity actually forms. The central criticism is that regulation has produced instruments that look prudentially sound on paper but commercially weak in practice. A new industry report argues that euro stablecoins remain a marginal force in digital payments and trading even though the euro plays a much larger role in traditional finance, suggesting the problem now lies less with currency relevance than with regulatory design itself.
That critique rests on how the rules treat electronic money tokens. The report’s sharpest point is that strict safeguards, combined with a ban on interest, have left euro stablecoins structurally uncompetitive in a positive-rate environment. Under MiCA, euro EMTs must be fully backed and cannot pay yield, a combination meant to stop them from becoming substitutes for bank deposits. But the authors argue that this leaves them disadvantaged against deposits and against foreign-currency stablecoins that can still attract liquidity through other mechanisms inside crypto markets for European issuers seeking traction.
Reform proposals now center on reserves and remuneration
The report is not calling for a wholesale rewrite. What it wants instead is a narrower recalibration that preserves safety while removing the features it says are choking commercial viability. One major target is MiCA’s reserve rule requiring at least 30% of EMT backing, rising to 60% for significant issuers, to be held as bank deposits. The authors say that threshold has no equivalent in other major stablecoin regimes and propose replacing rigid quotas with a principles-based approach tied more closely to Europe’s Liquidity Coverage Ratio framework and broader high-quality liquid euro assets.
That leaves Europe facing a policy choice it can no longer postpone. The wider debate is no longer whether euro stablecoins should be safe, but whether safety alone is enough if the product never reaches meaningful scale. The report argues for targeted changes to reserve, remuneration, and transparency rules, and says large issuers should have carefully limited access to central bank settlement accounts during severe stress. Yet any loosening is likely to meet resistance from supervisors already warning that weaker standards could increase arbitrage risks and create fresh stability concerns as the market grows.
