ECB seeks tighter MiCA rules to block indirect stablecoin yields and protect bank deposits

The European Central Bank (ECB) and the European Union’s national central banks want crypto platforms to be prevented from using lending, borrowing, staking and other products that offer indirect returns on stablecoin holdings.

“Electronic money is intended to be used for making payments and not as a means of saving,” the European System of Central Banks (ESCB) said in a response to the European Commission’s consultation on reviewing the Markets in Crypto-Assets regulation (MiCA).

In the 57-page response, the group said it “continues to support the prohibition on CASPs paying remuneration on stablecoins,” referring to crypto-asset service providers. The ban, it said, should not be limited to services already governed by MiCA, which began taking effect in June 2024, and should also cover unregulated activities, including crypto lending, borrowing and staking.

The banks said that allowing indirect returns could undermine the distinction between electronic money and bank deposits, as well as distort the level playing field across the EU financial system.

“Maintaining and, where necessary, strengthening the prohibition, covering both direct and indirect forms of remuneration, should be a clear legislative priority,” the ESCB stated.