Central banks across Europe are urging Brussels to eliminate a specific MiCA regulation regarding stablecoin reserves. This mandate compels major issuers to deposit 60% of those funds within commercial banks. Previously, Tether declined to pursue an EU license specifically because of this provision.
This appeal was submitted as part of the European Commission’s evaluation of MiCA, the union’s regulatory framework for cryptocurrency. A stablecoin functions as a digital token engineered to maintain a steady price, typically pegged to one euro or one dollar.
What the Central Banks Want Changed in the MiCA Rule
The European System of Central Banks (ESCB) submitted these remarks on Tuesday. This organization unites the European Central Bank (ECB) alongside the national central banks representing all 27 EU member countries.
Their concerns center on how banks are funded. The filing noted that capital fluctuating alongside token minting and burning does not qualify as stable deposit funding, warning that massive redemptions could strip lenders of liquidity overnight.
Rather than the current setup, they are advocating for a mandatory minimum portion of reserves to be kept in assets that mature within one to five business days. Reserves represent the cash and securities maintained by an issuer to guarantee every circulating token.
Furthermore, the document stated that authorities encounter “material challenges” when attempting enforcement, given that unauthorized digital asset businesses continue serving EU clientele. The ECB has previously cautioned that the growth of euro-denominated stablecoins might restrict credit availability from banks.
Why Tether Refused the Same MiCA Rule
The required deposit thresholds are structured in tiers. Under MiCA guidelines, standard issuers must store 30% of their assets in bank accounts, whereas entities designated by the EU as significant face a 60% requirement.
Tether—creator of USDT, the market’s leading stablecoin—chose not to apply for authorization. Since 2024, CEO Paolo Ardoino has maintained that this requirement compromises the safety of the tokens, noting that European deposit protection caps out at 100,000 euros.
“When MiCA becomes safer for consumers and stablecoin issuers, then we might reconsider,” he argued.
These two grievances approach the issue from contrasting angles:
- Ardoino wants the token protected from banks.
- The central banks want banks protected from the token.
Revolut halted European support for USDT earlier this year. Additionally, BeInCrypto disclosed in July that Circle supported a potential alteration to MiCA regulations that could pave the way for Tether’s return.
The public feedback period concludes on September 30. Until EU legislators officially modify MiCA, the 30% and 60% mandates stay in effect, and Tether remains unlicensed within the EU.