ECB Seeks to Ban Crypto Lending and Staking Yields on Stablecoins

crypto lending and staking — The European Central Bank (ECB) and EU national central banks are pushing to expand a ban on stablecoin yields to include indirect returns from crypto lending, borrowing, and staking.

The central banks argue that yield-bearing stablecoin products blur the line between electronic money and traditional bank deposits. They contend these products could circumvent existing restrictions and distort competition within the EU’s financial system.

The proposal aims to tighten rules under the Markets in Crypto-Assets (MiCA) regulation. It specifically targets mechanisms where stablecoins are used to generate returns for holders through third-party platforms.

Additionally, the banks suggested replacing current MiCA requirements for stablecoin issuers to hold 30% to 60% of reserves as bank deposits. They propose new liquidity rules based on how quickly reserve assets can be converted into cash instead.