The European Central Bank and other EU central banks have proposed removing a stablecoin deposits rule from the bloc's digital asset framework, according to a Reuters report published this week.

The recommendation targets a provision within the Markets in Crypto-Assets Regulation (MiCA), the European Union's comprehensive rulebook for crypto assets. MiCA entered into force in 2023, with stablecoin provisions applying from mid-2024. The framework established harmonized requirements for asset-referenced tokens and e-money tokens across the bloc's 27 member states, introducing authorization conditions, reserve backing obligations and disclosure requirements for issuers seeking to operate in the EU.

What does the deposits rule cover?

The provision under review addresses how European banks and crypto firms classify stablecoin holdings for prudential and reporting purposes. Stablecoins — digital tokens pegged to fiat currencies such as the euro or US dollar — represent a significant and growing segment of the global crypto market, with major issuers seeking regulatory compliance across multiple jurisdictions.

The ECB and national central banks have reportedly argued that the deposit treatment under MiCA overlaps with existing banking prudential standards that already cover institutional exposures to the asset class. Removing the requirement would reduce regulatory duplication and clarify capital treatment for European banks that custody stablecoin reserves or service crypto firms.

Why does the classification matter for institutions?

The prudential treatment carries direct operational consequences for European banks. Institutions handling stablecoin reserves or serving as banking partners for crypto firms currently apply specific risk weights and capital charges when treating stablecoin holdings as deposit-like instruments. Streamlining the classification would reduce compliance overhead and potentially expand institutional access to stablecoin-related services.

How does this fit the broader regulatory picture?

The proposal emerges as the ECB continues to monitor the implications of stablecoin adoption for monetary policy transmission, payment system integrity and the international role of the euro. The Eurosystem has previously flagged risks tied to widespread stablecoin adoption outside the euro area, including potential effects on financial stability and the central bank's policy autonomy.

How are issuers responding?

Major stablecoin issuers continue seeking compliant routes into the EU. Several issuers have pursued dedicated e-money institution licenses under pre-existing frameworks alongside the asset-referenced token authorization regime introduced by MiCA. Euro-denominated stablecoins remain a smaller share of the global market compared to US dollar-pegged tokens, though regulatory clarity in the EU could influence product development and institutional adoption.

What happens next?

The ECB and national central banks will coordinate their joint recommendation through the appropriate Eurosystem committees. Any amendment to MiCA's stablecoin provisions would require action through the EU's ordinary legislative procedure, including review by the European Commission and the European Parliament under the framework's existing review mechanisms. The process provides a structured channel for adjusting technical standards as digital asset markets mature and cross-border stablecoin activity expands.