Europe’s central banks want Brussels to rewrite part of MiCA, the European Union’s rulebook for crypto. At the center of the dispute is a requirement governing where large stablecoin issuers keep the reserves backing their tokens.
The European System of Central Banks, which includes the European Central Bank and the national central banks of all 27 EU member states, raised the issue in comments submitted during the European Commission’s review of MiCA.
The specific concern is bank deposits. Under the current rules, ordinary stablecoin issuers must keep at least 30% of their reserves in bank deposits. For issuers classified as significant, that minimum rises to 60%.
That creates an unusual clash. The money backing stablecoins can move quickly when users mint or redeem tokens, while traditional bank deposits are typically treated as more stable funding.
The central banks argued that this creates a risk for lenders. A sharp wave of redemptions could pull large sums out of banks almost overnight, leaving the institutions with a funding problem precisely when the money is needed elsewhere.
Their proposed alternative is more short-term assets, with a minimum portion of reserves held in instruments that mature within one to five working days.
Reserves are the assets a stablecoin issuer holds to support the value of the tokens it has put into circulation. The debate over where those assets sit may sound technical, but it touches a much larger question about where crypto fits inside Europe’s existing financial system.
MiCA’s Stablecoin Rule Puts Tether and Banks at Odds
Tether has already rejected the same requirement that the central banks now want changed.
The company behind USDT, the world’s largest stablecoin, never applied for an EU license. Its chief executive, Paolo Ardoino, has argued since 2024 that forcing issuers to place a large share of their reserves in banks could make stablecoins less secure rather than safer.
One of his objections is straightforward: European deposit insurance only covers bank deposits up to €100,000.
“When MiCA becomes safer for consumers and stablecoin issuers, then we might reconsider,” Ardoino said.
That puts Tether’s argument almost directly opposite to the central banks’ position.
Ardoino’s concern is that too much exposure to banks could weaken the token backing. The central banks’ concern is that stablecoins could, in turn, make bank funding less predictable.
The disagreement is becoming more relevant as European rules are applied in practice. Revolut removed USDT from its European offering this year, while BeInCrypto reported in July that Circle was supporting a change to the MiCA framework that could potentially allow Tether to return to the region.
There is another problem regulators are watching. The central banks said enforcement is proving difficult because crypto companies that do not comply with the rules can still reach customers in the European Union.
The ECB has also warned separately that wider adoption of euro-denominated stablecoins could put pressure on bank lending.
For now, the rule has not changed. The 30% and 60% reserve floors remain part of MiCA unless EU lawmakers amend the legislation.
The European Commission’s consultation closes on September 30. Until then, the dispute leaves both sides making a different argument about the same pool of money: Tether wants less dependence on banks, while Europe’s central banks want less dependence on stablecoins.