ECB Pushes Broader MiCA Overhaul as Crypto Risks Move Into Banking
Europe’s central banks want the next version of MiCA to regulate crypto less by fixed formulas and more by the risks that emerge when stablecoins, exchanges and traditional finance become interconnected.
Summary:
- The ESCB wants stablecoin regulation to move from fixed bank-deposit quotas toward measurable one-day and five-day liquidity.
- Centralized ESMA supervision could reshape how large crypto companies are authorized and monitored across the EU.
- Third-country stablecoins and an AML gap affecting some token issuers have emerged as weaknesses the central banks want addressed.
In a 57-page response to the European Commission’s review of the Markets in Crypto-Assets Regulation, the European System of Central Banks, comprising the ECB and the EU’s 27 national central banks, proposes changes spanning stablecoin reserves, crypto supervision, capital requirements, third-country issuers and anti-money laundering rules.
The recommendations do not replace MiCA’s existing requirements. They represent the ESCB’s position in the review and would require further EU legislative or regulatory action before changing the framework.
Stablecoin Rules Could Shift From Deposits to Liquidity
One of the most consequential proposals concerns how issuers of asset-referenced tokens and e-money tokens manage their reserves.
The ESCB supports removing predefined minimum percentages that issuers must keep as commercial-bank deposits. In their place, regulators would focus more directly on whether reserve assets can generate cash quickly enough to meet redemptions.
The consultation points to draft European Banking Authority standards under which at least 40% of reserves for significant tokens would mature within one working day and 60% within five working days. For non-significant tokens, the corresponding thresholds would be 20% and 30%.
The ESCB says those levels could provide a starting point for revised minimum liquidity requirements, although further analysis would be needed before determining the final calibration.
That changes what regulation is measuring. Rather than prescribing where reserves must sit, the framework would measure how quickly they can become available.
It could also expand the role of instruments such as short-term sovereign debt and overnight reverse repos alongside bank deposits, giving issuers additional ways to maintain liquidity without concentrating large balances at individual lenders.
Stablecoin Stress Can Travel in Both Directions
The concern is not theoretical.
The ESCB points to the March 2023 failure of Silicon Valley Bank, when Circle disclosed that part of the reserves backing USDC was held as uninsured deposits at the lender. USDC subsequently lost its dollar peg temporarily as markets questioned access to those funds.
That episode demonstrated how stress at a bank can spread to a stablecoin. The ESCB is also concerned about the reverse transmission channel.
If a large stablecoin experiences heavy redemptions, its issuer may rapidly withdraw reserve deposits to repay holders. For a bank that has come to depend on those balances, the outflow can create a sudden funding requirement.
Banking rules already recognize their unusual behavior. The consultation notes that deposits from stablecoin issuers receive a 100% outflow rate under the liquidity coverage ratio, reflecting the assumption that they can disappear rapidly under stress.
The issue becomes more significant as stablecoins scale. If volatile issuer balances replace more stable deposits, banks could face higher funding costs and potentially adjust their lending. At sufficient scale, the ESCB argues, that could also affect monetary-policy transmission.
ESMA Could Become the EU’s Main Crypto Supervisor
The review goes beyond stablecoins.
The ESCB supports transferring authorization and supervision of crypto-asset service providers from national authorities to the European Securities and Markets Authority.
MiCA created a common EU rulebook, but crypto companies can operate across multiple member states while supervision remains divided among national regulators. Centralizing oversight at ESMA could give regulators a single view of cross-border businesses and reduce differences in supervisory practices.
The central banks also want capital requirements to reflect what individual crypto companies actually do.
Current own-funds requirements are largely linked to fixed minimums and operating expenses. The ESCB argues that this may not adequately capture losses associated with activities such as custody, trading, lending and market making.
Large crypto groups pose another problem. A company can combine an exchange, lender, custodian and market maker through different affiliated entities, allowing risks to move across the group even when individual subsidiaries are supervised separately.
The ESCB therefore favors consolidated supervision for multifunction crypto groups, bringing the structure closer to the way complex financial institutions are assessed.
Offshore Stablecoins Create a Cross-Border Reserve Problem
The consultation also focuses on stablecoins issued simultaneously inside and outside the EU.
MiCA provides a framework for multi-issuer arrangements within the bloc, where participants operate under a common regulatory regime. The ESCB says the legal treatment becomes less clear when fungible tokens are also issued by entities in third countries.
The problem becomes most visible during redemptions.
READ MORE: SEC Gives Onchain Stock Markets a Five-Year Regulatory Window
An EU issuer could receive redemption requests for tokens originally issued outside the bloc even though the corresponding reserves are held by a foreign entity. Technical interchangeability between tokens does not necessarily mean the reserves and regulatory protections behind them are equally interchangeable.
If the EU permits these structures, the ESCB wants safeguards covering regulatory equivalence, supervisory cooperation and the ability to move reserves between jurisdictions during periods of stress. Redemption rights, custody, reporting and crisis-management arrangements would also need to remain aligned.
That could make the structure of global stablecoin businesses increasingly important to whether and how their tokens operate in Europe.
The ESCB Also Identifies an AML Gap
Another proposed change concerns asset-referenced token issuers.
The ESCB argues that ART and e-money token issuers performing comparable activities should face equivalent anti-money laundering and counter-terrorist financing obligations.
Its concern is that an ART issuer authorized solely under MiCA Article 21, without another qualifying financial-sector license, may not fall within the existing EU definition of an AML-obliged entity.
That could leave economically similar token businesses subject to different requirements.
The ESCB wants the discrepancy addressed according to the principle of “same activity, same risk, same regulation.” It also calls for the EU to consider updated Financial Action Task Force standards when reviewing rules for crypto transfers, including risks involving self-hosted addresses.
What the MiCA Review Could Change Next
The consultation shows that Europe’s crypto debate is moving beyond the question of whether the sector should be regulated. MiCA has largely answered that. The next question is whether the first framework captures the risks created as crypto businesses become larger, more interconnected and increasingly international.
For stablecoins, the critical numbers could shift from fixed bank-deposit quotas toward 40% liquidity within one day and 60% within five days for significant tokens.
For exchanges and other crypto service providers, the bigger structural change could be supervisory, with ESMA potentially assuming a much larger role across the single market.
Neither outcome is settled. The ESCB’s proposals now feed into the wider MiCA review, where lawmakers and regulators will have to decide how far Europe moves from its original rulebook toward a framework built around liquidity, cross-border exposure and group-level financial risk.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Alexander Zdravkov
Reporter at CoinsPress
Alexander Zdravkov is a market analyst and crypto journalist with interests in economics, broader financial markets and digital assets. His journey into crypto began more than four years ago, driven by a fascination with the rapid evolution of blockchain technology and the transformative potential of decentralized finance. He began analyzing market cycles and identifying emerging trends before they reach the mainstream. He holds a degree in International Relations - a background that helped shape his broader perspective on global economics, geopolitics, and the interconnected nature of modern financial markets. Whether covering the latest developments in the crypto sector or exploring broader macroeconomic themes, Alexander focuses on giving readers context rather than simply repeating headlines. During his career, he has authored more than 10,000 articles covering cryptocurrencies, traditional finance, and global market developments. His work spans everything from Bitcoin and altcoins to macroeconomic trends influencing risk assets worldwide.
