The European Central Bank and national central banks across the European Union are pressing the bloc to tighten its rules on stablecoin yields. In a joint position, they want EU rules to bar crypto platforms from offering lending, borrowing, staking, or similar products that generate returns on stablecoin holdings. Stablecoins are digital tokens designed to track the value of fiat currencies, which is why the distinction between payments and savings sits at the center of the debate.

The European System of Central Banks (ESCB), which comprises the ECB and the national central banks of the EU member states, outlined the request in its response to the European Commission's review of the Markets in Crypto-Assets Regulation (MiCA), the EU's regulatory framework for crypto-asset markets. According to the submission, electronic money should support payments, not savings, and restrictions should cover both direct rewards and indirect returns linked to stablecoin holdings. If the request is taken up, stablecoins held on EU platforms could no longer be paired with reward-generating services, reinforcing their role as payment instruments rather than savings vehicles.

Yield Restrictions to Extend Beyond MiCA

The ESCB warned that crypto firms could turn stablecoins into yield-bearing products through layered services. Central banks want to prevent stablecoins from functioning like interest-bearing bank deposits, and the proposed restrictions would apply across crypto-asset service providers and platforms.

The concern mirrors the dispute in the United States over stablecoin rewards, where banks pushed for tighter limits on interest-like returns offered by crypto platforms. The European proposal would also cover unregulated activities connected to stablecoin returns.

According to the central banks, broader restrictions would preserve the legal distinction between electronic money and bank deposits. The rules should also reach activities outside MiCA when those services create returns linked to stablecoin balances.

Reserve Requirements Face an Overhaul

The ESCB further proposed removing MiCA's minimum bank-deposit requirement for stablecoin reserves. Current rules require issuers to keep at least 30% of reserves at credit institutions, rising to 60% for larger designated stablecoins. The group wants these fixed deposit thresholds replaced with liquidity-based reserve requirements tied to how quickly assets mature and become available for redemptions.

The proposal comes as the debate over the CLARITY Act in the United States continues to focus on stablecoin rewards and bank funding concerns. The U.S. Senate recently failed to advance the bill in a 49-50 procedural vote.

Liquidity Rules Could Replace Deposit Thresholds

The central banks argued that large issuer deposits can create unstable funding for lenders if redemptions force sudden withdrawals. The ESCB instead wants reserves structured around short maturity periods so that assets remain readily available for redemptions.

Draft standards from the European Banking Authority offer one possible framework. They would require larger designated stablecoins to hold 40% of reserves in assets maturing within one day and 60% within five working days. For other stablecoins, the proposed levels would be 20% within one day and 30% within five working days. Because those standards remain drafts, the final shape of the reserve rules is not yet settled.

The push for tighter rules comes as European scrutiny of crypto regulation continues. Blockonomi recently reported on Binance's MiCA licensing case during the past week. The ESCB's requests now feed into the European Commission's ongoing MiCA review, the process through which any revisions to the framework would emerge.

This article is based on reporting from Blockonomi.