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

The European System of Central Banks (ESCB) has formally requested that the European Commission amend the Markets in Crypto-Assets (MiCA) regulation to remove the mandatory 60% bank-deposit reserve requirement for significant stablecoin issuers. Central banks argue that stablecoin reserves are inherently volatile and could trigger liquidity crises for commercial lenders if large-scale redemptions occur. This regulatory hurdle previously led Tether to decline pursuing an EU stablecoin license, as CEO Paolo Ardoino contended that holding reserves in commercial banks introduces unnecessary counterparty risk. The ESCB now proposes that issuers instead hold reserves in highly liquid assets maturing within one to five working days. This development highlights a fundamental tension between protecting the banking system from crypto-asset volatility and ensuring stablecoin issuers can maintain safe, liquid backing. As the consultation period concludes on September 30, the outcome will determine whether major issuers like Tether reconsider their European market strategy. The current rules remain in effect until formal legislative amendments are passed by EU lawmakers.