29th September 2026
By Cyrus Tong
On September 22, 2026, the European System of Central Banks, the body that unites the European Central Bank with the national central banks of all twenty-seven EU member states, filed its response to the European Commission’s targeted review of MiCA.
The submission contains a request that, when its full implications are understood, represents the most significant internal challenge to MiCA’s stablecoin reserve architecture since the regulation came into force in June 2024.
The ESCB is asking Brussels to scrap the mandatory bank deposit floor for stablecoin reserves entirely.
Not to reduce it.
Not to recalibrate the thresholds.
To remove the structural requirement altogether, and replace it with a liquidity-based framework that measures reserve quality by how quickly assets can be converted, not by what type of account they are held in.
The MiCA review consultation closes on September 30.
The window for this rewrite is open for eight more days.
The Rule the ESCB Wants to Remove
MiCA currently requires stablecoin issuers to hold a fixed proportion of their reserve assets as deposits in licensed credit institutions.
Standard issuers must hold at least thirty percent in bank deposits.
Issuers classified as significant must hold sixty percent.
This requirement was designed to ensure that stablecoin reserves were held in supervised, accessible structures rather than in less liquid or less transparent alternative assets.
The policy logic was straightforward:
If regulators could see where the reserves sat, and if those reserves were held in institutions subject to prudential oversight, the risk of reserve opacity was reduced.
The ESCB’s September 22 submission argues that this logic contains a structural error.
Money that swings with token creation and redemption is not stable deposit money.
The filing makes the argument that stablecoin reserve deposits behave fundamentally differently from ordinary customer deposits.
They arrive and depart at the pace of minting and redemption cycles rather than following the patterns of retail or corporate banking behaviour.
When heavy redemptions occur, those deposits can drain from lenders overnight, creating exactly the kind of liquidity shock that the reserve requirement was designed to prevent, but now transmitted through the banking system rather than the stablecoin market.
The ESCB cites a specific historical reference.
The March 2023 run on USDC, when Circle’s $3.3 billion in reserves held at Silicon Valley Bank became inaccessible during the bank’s collapse, causing USDC to de-peg to 87 cents, is offered as evidence that concentrated bank deposit holdings do not provide the stability that the deposit floor was intended to guarantee.
The concentration of reserves in a single credit institution created systemic exposure that the reserve requirement was supposed to eliminate.
The Proposed Alternative and What It Requires
Instead of a deposit floor tied to account type, the ESCB proposes a liquidity bucket model tied to maturity windows.
Significant stablecoins would be required to hold at least forty percent of reserves in assets maturing within one working day, and sixty percent within five working days.
Smaller issuers would face twenty and thirty percent thresholds respectively.
Eligible instruments would include overnight reverse repurchase agreements and short-term sovereign bonds, instruments that combine high credit quality with the rapid liquidity conversion that genuine reserve stability requires.
This model is not a new invention.
The European Banking Authority drafted technical standards along exactly these lines in 2024.
The ESCB’s September 22 submission is asking Brussels to adopt that liquidity framework as the operative standard, replacing the deposit quota that has been in force since June 2024 with the maturity-window approach the EBA had already designed.
For compliance functions currently managing stablecoin reserve portfolios against the deposit floor requirement, the practical implications are significant.
A shift from a deposit quota to a liquidity bucket model changes the reserve composition strategy fundamentally.
The question moves from “what percentage is held in bank deposits” to “what percentage can be liquidated within one working day.”
The eligible instruments change.
The counterparty relationships change, and the monitoring obligations change.
The Convergence Signal and Its Strategic Significance
The ESCB’s proposed liquidity model brings MiCA’s reserve framework meaningfully closer to the architecture of the GENIUS Act.
The US framework requires reserves to be backed by high-quality liquid assets, including US Treasuries and short-duration government obligations, without mandating that a fixed percentage be held as bank deposits.
If Brussels adopts the ESCB’s recommendation, the transatlantic gap between MiCA and the GENIUS Act on reserve composition narrows considerably.
This convergence has direct implications for international stablecoin issuers building compliance infrastructure across both regulatory regimes.
The institutions that have been managing the structural tension between MiCA’s deposit floor and the GENIUS Act’s asset quality approach may find that tension significantly reduced if the ESCB’s recommendation is adopted.
The ESCB submission also flags a concern that extends beyond reserve composition.
The filing notes that EU regulators face material challenges enforcing MiCA’s rules, because non-compliant crypto firms can still reach EU customers through unregulated channels.
This is not a peripheral observation.
It is an acknowledgment that the MiCA compliance perimeter has gaps that the regulation alone cannot close.
My Take
I have spent over two decades working across compliance frameworks in multiple jurisdictions.
And the ESCB’s September 22 submission is one of the most intellectually honest regulatory interventions I have seen in the stablecoin space.
It is honest because it comes from the institutions that designed the reserve architecture now being questioned.
When the ECB and the twenty-seven national central banks of the European Union collectively tell the European Commission that their own framework contains a structural flaw, and propose a specific alternative, that is not an industry lobbying position.
It is a self-correction by the regulatory architects themselves.
The March 2023 USDC event was the proof point that most reserve composition discussions chose to set aside after it happened. The ESCB has not set it aside.
It has made it the centrepiece of the argument for structural change.
For compliance professionals, the immediate implication is straightforward.
If this recommendation is adopted in the MiCA review, stablecoin reserve frameworks built on the deposit floor model will need to be restructured.
The question of when that restructuring becomes necessary depends on how quickly Brussels moves, but the September 30 consultation deadline means the legislative signal will be clear within days.
Build toward the liquidity model now.
Not because the rule has changed.
Because the institution that designed the rule just told you the rule needs to.
About the author
Cyrus Tong, an award-winning compliance expert, is the Group Chief Compliance Officer of DCS Group.
