EU crypto-asset regulation needs adjustment, as the share of euro-pegged stablecoins is less than 1% of the global stablecoin market due to the rules established by MiCA, despite the euro’s significance in the global financial system.
According to an analytical report by Blockchain for Europe, the current MiCA framework limits the development of euro-pegged stablecoins and makes them less competitive compared to their dollar-denominated counterparts.
A key issue identified by the authors is the ban on paying interest on stablecoins. As the European Central Bank (ECB) deposit rate rose from negative territory to over 4% between 2022 and 2023, these assets became less attractive to users compared to bank deposits and dollar stablecoins.
Another constraint is the reserve structure. MiCA requires at least 30% of reserves to be held in bank deposits, and up to 60% for significant issuers. This increases stablecoin issuers’ dependence on the banking system and may amplify risks during large-scale withdrawals.
At the same time, the total stablecoin market cap already surpassed $300 billion, with dollar-based instruments dominating by leveraging U.S. Treasury yields and mechanisms for indirect user incentives.
The report’s authors propose several reforms:
- allow limited yield on euro-pegged stablecoins;
- remove strict requirements on the share of bank deposits;
- expand the list of eligible reserve assets;
- improve reporting transparency;
- grant issuers partial access to central bank infrastructure.
It’s also noted that household deposits in the eurozone amount to approximately €5.4 trillion, meaning that even significant stablecoin growth in the medium term is unlikely to trigger a sharp outflow of funds from banks.
Experts warn that unless regulators adapt the rules, the euro risks losing ground in the emerging digital economy, where programmable money, asset tokenization, and automated payments are becoming increasingly important.
