European central banks push to ban stablecoin yields through lending and staking

The European Central Bank and the EU’s national central banks are pushing to close a loophole that would let crypto platforms pay indirect returns on stablecoins through lending, staking or borrowing products. The push, aimed at the European Commission’s review of the Markets in Crypto-Assets regulation, mirrors a fight already playing out in Washington over the failed Clarity Act.

• The ECB and EU national central banks want lending, borrowing, staking and other indirect-return products on stablecoins barred under MiCA.
• The European System of Central Banks made the case in a 57-page response to the European Commission’s MiCA review consultation.
• The group also proposed scrapping the 30%-60% bank-deposit reserve rule in favor of liquidity-based maturity requirements for issuers.

• 57-page length of the ESCB’s formal response to Brussels’ MiCA review
• 30%-60% current MiCA reserve-deposit requirement the ESCB wants replaced
• 40%/60% draft EBA liquidity thresholds for significant stablecoins at one and five days
• 49-50 margin by which the U.S. Clarity Act failed its procedural Senate vote

The European Central Bank and the European Union’s national central banks are lobbying to widen an existing ban on stablecoin yields so it covers indirect returns generated through crypto lending, borrowing and staking, according to reporting by CoinDesk. The demand appears in a 57-page response the European System of Central Banks filed with the European Commission’s consultation on reviewing MiCA, the bloc’s crypto-asset rulebook that began taking effect in June 2024. The central banks argue that letting crypto-asset service providers structure indirect payouts would effectively recreate the interest-bearing product MiCA already prohibits outright.

ESCB wants ban extended beyond regulated services

The ESCB’s filing states plainly that stablecoins should not function as savings vehicles. “Electronic money is intended to be used for making payments and not as a means of saving,” the group wrote in its response.

The response says the central banks “continue to support the prohibition on CASPs paying remuneration on stablecoins” and want that prohibition to extend past services already governed by MiCA. That means covering unregulated activity such as third-party lending and staking arrangements that sit outside the rulebook’s current reach. The ESCB warned that stablecoins can be “transformed into yield-bearing arrangements through lending, staking or other layered structures,” which it said would let issuers or platforms sidestep the remuneration ban entirely.

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

European System of Central Banks, response to the European Commission’s MiCA review consultation

Reserve rule would shift from 30%-60% deposits to liquidity timing

Beyond the yield question, the central banks want to rewrite how stablecoin issuers hold their reserves. MiCA currently requires issuers to keep at least 30% of reserves as deposits at credit institutions, rising to 60% for stablecoins designated as significant under the regulation.

The ESCB argues that concentrating reserves in bank deposits creates its own risk. Large stablecoin deposits, it said, can become an unstable funding source for banks if an issuer needs to withdraw quickly to meet a wave of redemptions.

In place of the deposit thresholds, the ESCB proposed liquidity rules tied to how fast reserve assets convert to cash. It pointed to draft European Banking Authority standards requiring significant stablecoins to hold at least 40% of reserves in assets maturing within one day and 60% within five working days, with lower 20% and 30% thresholds for non-significant stablecoins.

Clarity act’s 49-50 vote set the U.S. Precedent

The European dispute closely tracks an argument that already played out in Washington. Eight U.S. banking groups pressed senators to tighten stablecoin reward restrictions in the Clarity Act, warning that crypto platforms could otherwise offer interest-like returns competing directly with bank deposits.

The Clarity Act failed a 49-50 procedural vote, with ethics provisions unrelated to stablecoins also weighing on the outcome. Crypto industry groups have not offered a public response to the ESCB’s proposal in the reporting reviewed here, leaving the platform side of the European debate unaddressed so far.

The BlockWest read. If Brussels adopts this language, the practical effect falls on platforms and treasuries that route idle stablecoin balances into lending or staking pools for extra basis points. Corporate holders using stablecoins for working capital would lose a common yield workaround, pushing them back toward money-market funds or direct bank deposits for any return at all. Issuers, meanwhile, would face a cheaper compliance path under liquidity-based reserve rules than under the current fixed deposit mandate.

The European Commission has not set a public timeline for incorporating the ESCB’s proposals into its MiCA review, leaving open whether the expanded yield ban or the liquidity-based reserve overhaul survives into draft legislation.

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