European central banks are pushing to scrap the mandatory bank deposit requirement for stablecoin reserves under the Markets in Crypto-Assets (MiCA) regulation to protect the broader banking sector from crypto-related shocks. Currently, MiCA mandates that stablecoin issuers hold a significant portion of their backing assets in commercial bank accounts. However, regulators now argue that this creates a dangerous link where a sudden run on a stablecoin could lead to a corresponding run on the banks holding those reserves, potentially destabilizing the entire financial ecosystem.
This regulatory shift comes as the United Kingdom concludes its consultation on the systemic sterling stablecoin code in early 2026. Both the EU and UK are moving toward a framework that prioritizes financial stability over issuer convenience. By removing the commercial bank mandate, regulators are likely pushing issuers toward safer, but lower-yielding, assets such as short-term government bonds or direct deposits with central banks, effectively narrowing the gap between stablecoins and traditional Money Market Funds (MMFs).
For major issuers like Circle and Tether, these changes could significantly alter how they manage collateral for tokens like USDC and USDT. If issuers are forced to move away from commercial bank deposits, the interest income they typically earn on those balances could diminish, potentially leading to new transaction fees for users to maintain profitability. Furthermore, this move signals a hardening stance against the integration of private stablecoins into the retail banking infrastructure.
Investors and treasury managers should closely monitor the European Banking Authority (EBA) for the final technical standards on reserve management. As Europe and the UK align their systemic stablecoin rules, the US Congress may face increased pressure to adopt similar safeguards in pending domestic stablecoin legislation. The long-term implication is a more isolated, but theoretically safer, stablecoin market that operates with less reliance on private commercial banking liquidity.