In a 57-page response to the European Commission's review of MiCA filed on September 22, 2026, the European System of Central Banks asked EU legislators to extend the existing ban on stablecoin interest to lending, staking and loyalty-style rewards, while also removing the rule that requires issuers to hold part of their reserves in bank deposits. The two requests point in opposite directions, and both turn on how European banks compete for deposits.
ECB Asks the EU to Ban Stablecoin Yield and Ease Bank-Deposit Reserve Rules
On September 22, 2026, the European Central Bank and the euro area's national central banks submitted a 57-page response to the European Commission's review of MiCA, the bloc's crypto-asset rulebook. It contains two requests that pull in opposite directions.
The first would extend MiCA's existing prohibition on paying interest on stablecoins to lending, borrowing, staking and loyalty-style rewards. The second would remove the requirement that issuers hold part of their reserves in bank deposits, the same rule that tied USDC to Silicon Valley Bank in 2023. Read together, the submission is less about payment risk than about the competition stablecoins pose to European bank deposits.
Key Takeaways
- The European System of Central Banks wants the ban on stablecoin interest extended to indirect forms of remuneration, including lending, staking and reward programs.
- In the same document it asks to delete MiCA's requirement that issuers hold 30% of reserves in bank deposits, and 60% for tokens designated significant.
- The reserve proposal replaces deposit requirements with maturity limits: significant tokens would hold 40% of reserves in assets maturing within one working day and 60% within five, smaller tokens 20% and 30%.
- The yield ban would apply to EU-authorized issuers and platforms. It would not remove demand for yield, and the most likely effect is migration of that demand to offshore venues and non-euro tokens.
- Nothing takes effect now. The submission feeds a Commission review, and a formal MiCA revision is expected around 2027, requiring approval from the European Parliament and member states.
What did the central banks ask for?
MiCA already bars issuers and crypto-asset service providers from paying interest on e-money tokens. The submission argues that platforms are "replicating the economic effect of interest payments through ancillary or unregulated services" and asks that the prohibition cover both direct and indirect remuneration. Lending, borrowing, staking, and loyalty programs that function like interest are named as targets.
"Maintaining and, where necessary, strengthening the prohibition, covering both direct and indirect forms of remuneration, should be a clear legislative priority," the central banks wrote. Alongside this they restated the position that electronic money is designed for payments rather than as a store of value.
The submission also asks for powers to restrict foreign-currency stablecoins, in practice USDT and USDC, for supervision of larger crypto firms to move to a single EU authority, and for staking and lending to be regulated at Union level.
Why is the reserve-rule change significant?
MiCA requires stablecoin issuers to keep a share of reserve assets in deposits at authorized EU credit institutions: 30% generally, and 60% for tokens designated significant. The central banks now propose dropping that requirement in favor of liquidity limits based on maturity.
Under the proposal, significant tokens would hold 40% of reserves in assets maturing within one working day and 60% within five working days; smaller schemes would hold 20% and 30% respectively.
The deposit requirement is the rule that linked stablecoin reserves directly to the banking sector. In 2023, Circle disclosed that about $3.3 billion of USDC reserves were held at Silicon Valley Bank shortly before it failed. Reserve holders were exposed to a bank partly because the rule pushed them toward bank deposits.
Tether has cited the same requirement among its reasons for not pursuing an EU license, and its chief executive has argued against the deposit rule since 2024. Moving to maturity-based limits addresses a criticism the industry has made since MiCA was drafted.
Why do the two requests conflict?
The reserve change weakens the link between stablecoins and banks. The yield ban reduces the ability of stablecoins to compete with banks. Both appear in the same submission.
The tension is analytical, not just rhetorical. If stablecoins were purely a payments rail with no function as a store of value, reserve composition would be a minor technical question and there would be little reason to prohibit remuneration. The case for a yield ban depends on the premise that holders treat stablecoins as savings, which is the same premise that makes deposit outflows a live concern for banks.
The submission also asks to restrict foreign-currency stablecoins on the grounds that they circulate widely in the EU. A token that circulates mainly as a store of value is the token that needs reserve rules; a token used only to settle payments is not.
How did the same argument play out in the United States?
The 2025 GENIUS Act banned US stablecoin issuers from paying interest to holders, while leaving exchanges free to offer their own reward programs. Extending the prohibition to those rewards became the central contested issue in the Digital Asset Market Clarity Act, which failed in the Senate on September 15, 2026 on a 49-50 cloture vote, short of the 60 votes needed to proceed.
Banking groups lobbied for the extension, arguing that reward programs would draw funds out of insured deposits, and the chief executive of one large US bank warned publicly that yields on stablecoins would drain deposit funding. The bill collapsed with the provision unresolved. European central banks are now proposing the restriction the US Senate did not enact.
Why does TerraUSD keep coming up?
The 2022 collapse of TerraUSD, an algorithmic stablecoin that offered a high yield and lost its peg, erased roughly $40 billion in value and remains the reference case in EU policy debate on stablecoin remuneration. The design had no fully liquid reserve backing; the yield came from an external token issuance mechanism.
MiCA's rules apply to fully reserved e-money tokens. Citing TerraUSD as justification for restricting yield on backed tokens requires treating two different balance sheets as one category, which is why industry respondents argue the precedent does not support the measure being proposed.
What happens if the yield ban is adopted?
A prohibition on EU-authorized issuers and platforms does not remove demand for yield. Three responses remain available to holders: an offshore venue outside MiCA's scope, a decentralized protocol with no authorized counterparty, or a non-euro stablecoin. The first two sit outside the supervisory perimeter the rules are meant to defend; the third is a dollar-denominated asset.
That outcome runs against the EU's stated objective of reducing dollar dependence in payments. Restricting euro-denominated yield products while dollar tokens remain available makes the euro version structurally less attractive to hold.
There is a second likely consequence. If stablecoins may not pay yield and banks may, the natural product is a tokenized bank deposit: a deposit represented on a ledger, paying interest, issued under a banking license. The ECB's own Pontes settlement platform, launched the day before the submission, is designed to settle tokenized assets in central bank money. The realistic result of the ban is not the absence of yield but its confinement to licensed institutions.
What happens next?
The submission is input to the Commission's review, not legislation. A formal MiCA revision is expected around 2027 and would require approval from the European Parliament and EU member states, followed by an implementation period.
The two proposals are unlikely to travel the same distance. Reserve-composition changes have industry support, a clear technical rationale, and no new supervisory powers attached. Extending the yield prohibition requires defining which reward programs count as indirect remuneration and applying that definition consistently across national supervisors.
For the market, the practical consequence is a split between licensed and unlicensed venues rather than a disappearance of stablecoin yield. Which assets settle in the euro area, which migrate offshore, and where regulated yield products first appear are the questions that carry through 2027.
FAQ
Is stablecoin yield currently legal in the EU?
Issuers and authorized crypto-asset service providers cannot pay interest on e-money tokens under MiCA. Reward programs run by platforms, staking returns and lending yields operate in a grayer area, which is what the central banks are asking the Commission to close.
What is the bank-deposit reserve requirement?
MiCA requires stablecoin issuers to hold 30% of reserve assets in deposits at authorized EU credit institutions, rising to 60% for tokens designated significant. The submission would replace those figures with maturity limits, with assets maturing within one to five working days.
Would the ban affect USDC and USDT in Europe?
Separately from the yield proposal, the submission asks for the power to restrict foreign-currency stablecoins, a category that in practice covers USDT and USDC. Any such measure would still require legislation through the MiCA review.
When could any of this take effect?
The Commission's review may produce a formal legislative proposal around 2027. Approval by the European Parliament and member states would be required, followed by an implementation period.
Which part of the proposal has the best chance of passing?
The reserve-rule change. It has technical support across the industry, addresses a documented weakness in MiCA, and does not require new supervisory powers. The extension of the yield prohibition faces definitional and enforcement objections and is the more contested element.
Primary sources: the European Central Bank's response to the Commission's MiCA review consultation, the MiCA text on e-money token reserves, the GENIUS Act, and the Senate cloture record on the Digital Asset Market Clarity Act.