European Union · CoinDesk
European central banks push to expand stablecoin yield ban to crypto lending and staking
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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.
Key facts
- Those standards require significant stablecoins to hold at least 40% of reserves in assets maturing within one day and 60% within five working days
- The ESCB said the minimum deposit requirement should be replaced with rules requiring stablecoin issuers to hold specified portions of reserves maturing in 1-5 working days
- 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
- 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
Summary
The central banks said yield-bearing stablecoins could blur the distinction between electronic money and bank deposits, circumvent existing restrictions and distort competition in the European Union’s financial system. The banks also proposed replacing requirements that issuers keep 30% to 60% of stablecoin reserves in bank deposits with liquidity rules based on how quickly reserve assets can be converted into cash.