TLDRThe ECB wants wider EU restrictions on stablecoin yield from lending, borrowing, staking, and similar products.The ESCB said current rules should cover both direct rewards and indirect returns linked to stablecoin holdings.Central banks want to prevent stablecoins from functioning like interest-bearing bank deposits.The ESCB proposed replacing MiCA’s bank deposit reserve thresholds with liquidity-based maturity requirements.Draft rules could require larger stablecoins to hold 40% of reserves within one-day maturity and 60% within five working days.The European Central Bank and national central banks want the EU to tighten rules around stablecoin yield. They want EU rules to bar crypto platforms from offering lending, borrowing, staking, or similar products that generate returns from stablecoin holdings.The European System of Central Banks outlined the request in its response to the European Commission’s MiCA review. It said electronic money should support payments, not savings, and called for restrictions covering direct and indirect remuneration.Stablecoin Yield Debate Extends Beyond MiCAThe ESCB said crypto firms could turn stablecoins into yield-bearing products through layered services. That concern mirrors the U.S. stablecoin reward dispute, where banks pushed for tighter limits on interest-like returns offered by crypto platforms. The European proposal would also cover unregulated activities linked to stablecoin returns.The central banks said broader restrictions would preserve the legal difference between electronic money and bank deposits. They also said the rules should reach activities outside MiCA when those services create returns linked to stablecoin balances. The stablecoin yield restriction would apply across crypto-asset service providers and platforms.Reserve Rules Face Proposed ChangesThe ESCB also proposed removing MiCA’s minimum bank-deposit requirement for stablecoin reserves. Current rules require issuers to keep at least 30% of reserves at credit institutions, rising to 60% for larger designated stablecoins. The proposal would replace fixed deposit thresholds with liquidity-based reserve requirements.Instead, the group wants reserve rules based on how quickly assets mature and become available for redemptions. The proposal comes as the CLARITY Act debate in the United States continues to focus on stablecoin rewards and bank funding concerns. The Senate recently failed to advance the bill in a 49-50 procedural vote.Liquidity Rules Could Replace Deposit ThresholdsThe central banks said large issuer deposits can create unstable funding for lenders if redemptions force sudden withdrawals. Blockonomi reported Binance’s MiCA licensing case during the past week as European scrutiny of crypto regulation continued. The ESCB instead wants reserves structured around short maturity periods.Draft European Banking Authority standards offer one possible framework. They would require larger designated stablecoins to hold 40% of reserves in assets maturing within one day and 60% within five working days. For other stablecoins, the proposed levels would be 20% within one day and 30% within five working days.The post EU Central Banks Push New Stablecoin Yield Limits appeared first on Blockonomi.