European central bankers have a message for crypto platforms that found a way around the EU’s stablecoin yield ban: the loophole is about to close.
The European System of Central Banks, which groups the European Central Bank and the national central banks of the EU, has called for MiCA’s ban on stablecoin remuneration to be expanded so it covers lending, borrowing, staking and other layered products that can hand token holders an indirect return. The position was laid out in a 57-page response to the European Commission’s consultation on reviewing the Markets in Crypto Assets framework, published in September 2026.
Why the ECB wants the yield ban widened
MiCA already prevents issuers of electronic money tokens and crypto asset service providers from granting interest on those tokens. But the ESCB argues that platforms can structure products outside MiCA that effectively transform stablecoins into yield-bearing arrangements anyway — through lending, staking or what the central bankers describe as “other layered structures.”
“Electronic money is intended to be used for making payments and not as a means of saving,” the ESCB said in its response, adding that it “continues to support the prohibition on CASPs paying remuneration on stablecoins” — a reference to crypto asset service providers.
The central banks want EU lawmakers to make explicit that the restriction covers both direct payments and returns generated through other products. In their view, allowing such arrangements would blur the regulatory line between electronic money and bank deposits while creating unequal conditions between crypto companies and regulated financial institutions.
“Maintaining and, where necessary, strengthening the prohibition, covering both direct and indirect forms of remuneration, should be a clear legislative priority,” the ESCB wrote.
A familiar fight — Europe mirrors the US stablecoin debate
The ESCB’s stance closely resembles the dispute that has shaped the stablecoin rewards debate in the United States. In September, eight banking associations asked US lawmakers to tighten the CLARITY Act’s restrictions on stablecoin incentives, arguing that rewards linked partly to balances or holding periods could operate like interest on bank deposits even when another condition was attached.
In July, the American Bankers Association, the Independent Community Bankers of America and 76 state banking associations sought tighter restrictions on incentives that could encourage customers to hold stablecoins instead of keeping money in bank accounts. Citigroup CEO Jane Fraser raised a similar concern in August, warning that stablecoin reward programs could reduce deposits available to lenders — though she backed passage of the CLARITY Act overall.
The US legislation ultimately failed to advance in a 49-50 procedural vote on September 15, with the debate covering stablecoin rewards as well as ethics provisions. A Senate compromise had sought to restrict passive yield while preserving some activity-based incentives.
Central banks also want MiCA reserve rules rewritten
Alongside the remuneration push, the ESCB proposed changing how MiCA regulates the reserves backing stablecoins. Current EU rules require issuers of tokens referencing official currencies to keep at least 30% of the referenced amount as deposits with credit institutions, rising to 60% for tokens classified as significant.
The central banks want those minimum deposit requirements removed. Their concern is that large stablecoin issuers could become an unstable source of funding for banks: if an issuer faced heavy redemptions, it might need to withdraw a large deposit over a short period, exposing the receiving bank to sudden funding pressure at exactly the moment the issuer is scrambling for cash to satisfy redemption requests.
Instead of forcing a fixed share of reserves to sit in bank deposits, the ESCB proposes rules based on how quickly reserve assets can mature or be converted into cash. The framework leans on European Banking Authority standards: significant stablecoins would need at least 40% of reserve assets available within one working day and 60% within five working days, while non-significant tokens would face thresholds of 20% and 30% respectively. The EBA calibrated those figures partly on deposit outflows observed during crypto-related stress events.
What it means for stablecoin issuers in Europe
If adopted, the proposals would separate the amount of liquidity an issuer must hold from the amount it must park directly with commercial banks. Issuers would still need liquid reserves, but compliance would hinge far more on the maturity profile of the assets backing their tokens than on where the money sits.
The review lands as European authorities continue refining MiCA after its stablecoin provisions began applying in June 2024. The framework introduced EU-wide requirements for asset-referenced tokens and electronic money tokens, covering reserve management, permanent redemption rights and heightened supervision for significant tokens. MiCA also requires reserve assets to be legally and operationally segregated from an issuer’s own estate.
For crypto platforms operating in the EU, the message is blunt: any product that wraps a stablecoin in a yield-generating structure is squarely in the central banks’ crosshairs. The ESCB wants the prohibition to apply regardless of whether the return flows directly from the issuer or through lending, staking or another layered product built around the token.
Market backdrop
The regulatory posturing comes as digital asset markets trade firmly higher. Bitcoin is changing hands near 85,958 USD, up roughly 5.9% over the past 24 hours, while Ethereum trades near 2,751 USD and Solana near 117 USD, according to the batch price snapshot.
Neither the yield-ban expansion nor the reserve overhaul is law yet — both are consultation responses that would need to work their way through the EU legislative process. But with the ECB, the ESCB and the EBA broadly aligned on liquidity-based reserves and a hard line on indirect remuneration, stablecoin issuers targeting Europe should expect the rules to tighten, not loosen, as the MiCA review advances.
translated: keep your money in our banks earning zero while inflation eats it. regards, the ECB
meanwhile jane fraser is crying about deposits in the US. same fight, different continent lol
the inflation framing is the honest one. the ESCB paper basically admits e-money tokens compete with bank deposits, so widening the ban to lending and staking was always about protecting that funding, not consumers
pretty much. and the irony is the same banks that pushed for this will happily sell you a tokenized money market fund doing the identical thing
the tokenized MMF comparison is a stretch tho, that fund holds regulated collateral. the ESCB objection is unbacked promises dressed as payments
regulated collateral that broke the buck in 2008, sure. the difference is who eats the loss, and the escb wants that answer to always be a bank
The liquidity part is actually sensible. 40% of reserves redeemable within one working day protects holders better than forcing deposits at commercial banks.
Banning indirect yield just pushes it offshore. EUR stablecoin liquidity already thinned out after MiCA, a wider ban makes that worse
EURC already lost most of its share to USD pairs in the EU. this ban protects nothing, it just finishes off whatever euro stablecoin segment was left standing
the ban just adds a tax on yield for anyone willing to jump the hoops. offshore routing needs KYC-free ramps and those keep shrinking anyway
fun game: swap the ESCB for the eight US banking associations and the letter reads identical. same playbook on both continents, banks draft the rules and call it consumer protection
A 57-page response just to say people should not earn anything on money they hold. The ESCB really typed all that out instead of admitting Europeans will simply route through offshore platforms.
the layered structures phrase is the giveaway. they know a direct ban is unenforceable so they are pre-writing the enforcement story for when issuers route around it anyway
The quote about e-money being for payments and not savings tells you everything. They see any yield feature as a deposit substitute and bank funding flight. MiCA was always a defensive perimeter.
57 pages and not one paragraph explaining how they stop a defi vault from paying out. enforcement by press release
Closing the lending and staking loophole just means the yield moves to chains they cannot touch. Good luck enforcing layered product bans on a permissionless protocol, ESCB.
57 pages to restate that savings belong in bank deposits. europeans already voted with their feet, the EURC share numbers tell that story
57 pages and not one line about where the yield actually went. defi lending on EURC didnt pause when MiCA passed, it grew
ban the yield and europeans just route to offshore platforms or self custody staking. the 40% one day liquidity rule is sensible, the rest is fighting the tide
the 40 percent one day liquidity rule is the one paragraph i agreed with too. shame its buried under a ban that just relocates yield to whichever chain ignores brussels
the 40 percent redemption rule is the only paragraph written for actual holders. the rest reads like a jobs program for offshore frontends
routing offshore works until your offramp is a CASP too. then the ban catches you at the exit, not at the entry