Tether Rejected This MiCA Rule. Now the ECB Wants It Gone

Europe's central banks want Brussels to delete a MiCA rule on stablecoin reserves. It forces large issuers to keep 60% of that money in commercial banks. Tether refused an EU license over the same clause.

The request landed in the European Commission's review of MiCA, the bloc's crypto rulebook. A stablecoin is a token designed to hold a fixed value, usually one dollar or one euro.

What the Central Banks Want Changed in the MiCA Rule

The European System of Central Banks (ESCB) filed the comments on Tuesday. The body groups the European Central Bank (ECB) with the national central banks of all 27 EU member states.

Their objection concerns bank funding. Money that swings with token creation and redemption is not stable deposit money, the filing said. Heavy redemptions could drain it from lenders overnight.

Instead, they want a minimum share of reserves held in assets that mature within one to five working days. Reserves are the cash and bonds an issuer holds to back every token it has sold.

The same filing said regulators face "material challenges" enforcing the rules, because non-compliant crypto firms still reach EU customers. The ECB has separately warned that euro stablecoin expansion could squeeze bank lending.