Europe's central banks ask Brussels to extend MiCA's stablecoin yield ban to lending and staking

The ESCB's case is a definition. "Electronic money is intended to be used for making payments and not as a means of saving," it wrote ^[5]. In the ESCB's argument, a token that pays its holder for holding starts to look like a deposit account, and deposit accounts are governed by different rules ^[6]. MiCA already bars paying stablecoin holders ^[18]. The new request goes after the routes around that bar ^[2][3].

Aave Labs answered with a point about who pays. The current ban stops issuers and platforms from paying people to hold a coin, Aave argued, while a lending return is paid by a borrower who posts collateral to a lender who bears the risk, much like lending euros or bonds ^[12]. Those are two cash flows with different sources of risk. The ESCB would put both under one prohibition ^[2]. Aave says a wider ban hands dollar stablecoins the advantage in on-chain markets and costs MiCA tokens a key use case ^[13]. Stani Kulechov, the founder of Aave, said on X that he was "disappointed" by the responses from the ECB and the European Banking Authority ^[14]. Stand With Crypto EU, an advocacy group, said more than 50,000 people emailed the Commission asking it to let regulated stablecoins offer rewards and cashback ^[15].

The reserve proposal is the stranger term. The same body that wants to stop stablecoins competing with bank deposits for savings would also stop forcing stablecoin reserves into bank deposits ^[2][7]. Under that second change, banks would no longer be guaranteed the 30% to 60% slice of issuer reserves by rule ^[3]. Circle backed the ESCB on this one, writing that the deposit floor raises exposure to banking-sector credit risk ^[10].

Circle's wider complaint is about who is inside the regime at all. It wrote that the regulator should look at the perimeter, not a shortage of licensed issuers ^[9]. Its three-of-25 count leaves 22 of the largest stablecoins, 88% of the group, outside MiCA ^[1][2]. A wider ban could leave MiCA tokens unable to match perks available in the US and elsewhere, Cryptopolitan reported ^[17]. The reporting does not set out what US rules permit.

The comment window closed on September 30 ^[16], and the Commission can now adopt the ESCB list in full ^[2][3]. It could follow ESMA's disclosure route for lending, staking and borrowing ^[8]. Keeping the prohibition where it sits, on payments to holders, is the third option ^[18]. I'd expect the reserve change to come through more easily than the yield extension, because the ESCB and Circle agree on reserves ^[7][10] while ESMA proposed disclosure for the same activities the ESCB wants banned ^[8]. The case against that view is that the holder ban already exists ^[18], and widening a prohibition takes less drafting than building the licensing regime ESMA describes. If the Commission's proposal names lending or staking in the ban, that view is wrong.