The European System of Central Banks published a formal paper opposing MiCA's requirement that stablecoin issuers hold 30% of reserves as bank deposits, rising to 60% for major issuers. The ESCB argues this concentrated exposure to bank deposits introduces systemic risk for lenders and undermines the stability the regulation intends to create. The paper calls for revising or eliminating the deposit requirement in favor of alternatives such as central bank reserves or short-term government securities.
For Armada's crypto repo desk, stablecoin reserve composition matters when stablecoins serve as margin or settlement currency in repo transactions. If MiCA is revised to allow higher concentrations of sovereign or money market assets in stablecoin reserves, the credit quality and liquidity profile of euro-denominated stablecoins could improve significantly. For EU-connected counterparties such as institutional holders or market makers operating under MiCA, reserve rule changes may affect which stablecoins they are permitted to use.