ESCB Proposes Changes to MiCA and Broader EU Crypto Market Regulation

The ESCB, which comprises the European Central Bank (ECB) and the national central banks of EU member states, submitted proposals to the European Commission for a review of MiCA. According to the ESCB, the existing regulatory framework needs to be adjusted based on experience with the regulation’s implementation, developments in the crypto market, and the emergence of new business models.

The key changes proposed by the ESCB include:

• Move CASP supervision to the EU level. The ESCB proposed transferring responsibility for the authorization, supervision, and enforcement of crypto-asset service providers (CASPs) to the European Securities and Markets Authority (ESMA). These functions are currently handled primarily by national regulators.
• Revise capital requirements for CASPs. Instead of an approach based primarily on operating expenses, the ESCB proposed taking into account the financial and nonfinancial risks of each business. This is particularly relevant for companies that combine regulated crypto services with proprietary trading, lending, borrowing, staking, and leveraged activities.
• Broaden the criteria for significant CASPs. One of the key criteria currently used is an average of 15 million active users over a calendar year. The ESCB proposed also considering trading volume, the value of assets under custody, balance sheet size, the volume of client transactions, cross-border activity, and systemic importance. Significant CASPs would also be required to establish an intermediate parent undertaking in the EU.
• Change stablecoin reserve requirements. MiCA requires nonbank issuers to hold at least 30% of their reserves as deposits with credit institutions. For significant electronic money tokens (EMTs) and asset-referenced tokens (ARTs), the requirement is 60%. The ESCB proposed eliminating fixed minimum deposit ratios and moving to liquidity requirements based on asset maturities.
• Introduce 1-day and 5-day reserve liquidity requirements. As a starting point, the ESCB proposed using standards developed by the European Banking Authority (EBA). For significant stablecoins, at least 40% of reserve assets would have to mature within 1 business day and 60% within 5 business days. For other tokens, the thresholds would be 20% and 30%, respectively.
• Maintain and strengthen the ban on stablecoin yield. The ESCB proposed extending the restriction to direct and indirect forms of remuneration, including arrangements involving crypto lending, staking, certain loyalty programs, and decentralized finance (DeFi) mechanisms.
• Bring staking, crypto lending, and borrowing under EU-level regulation. The ESCB proposed distinguishing these services based on their economic substance and separating agency models from investment services and activities that effectively constitute banking intermediation.
• Clarify DeFi regulation. MiCA currently doesn’t apply to services provided in a fully decentralized manner without an intermediary, but it doesn’t provide a clear test for what constitutes “full decentralization.” The ESCB proposed establishing an approach to DeFi protocols and bringing lending and staking services provided through such arrangements within the regulatory framework.
• Regulate stablecoins with multiple issuers across different jurisdictions. The ESCB proposed explicitly addressing under MiCA whether structures involving issuers in the EU and third countries should be permitted. If such models are allowed, they would require a framework for assessing the equivalence of foreign regulation, along with additional requirements for reserves, redemption, asset custody, reporting, and crisis management.
• Strengthen crisis management rules for stablecoin issuers. The ESCB proposed aligning MiCA requirements with the Bank Recovery and Resolution Directive (BRRD) and establishing a separate crisis management framework for nonbank issuers of significant EMTs and ARTs.

At the same time, the ESCB didn’t propose extending MiCA to all types of tokenized assets. Tokenized financial instruments would remain subject to the relevant financial services legislation, while tokenized deposits would continue to be regulated under existing EU banking law. The ESCB also called for harmonizing EU rules on the legal status of tokenized assets, as differences in national property, corporate, and insolvency laws create barriers to a cross-border market.

MiCA was approved in 2023 and took effect in late 2024. When the transitional period ended in July 2026, the provisional MiCA register listed 244 CASPs and 40 EMTs. Just 1 month later, their number began to rise rapidly, reaching 349 by September 2026, with banks accounting for 23%.