ECB, 27 EU Central Banks Seek Wider Stablecoin Yield Ban

The European Central Bank and all 27 national central banks that make up the European System of Central Banks want Brussels to close the door on stablecoin yield entirely, extending an existing ban beyond regulated crypto firms to cover lending, staking and other products that pay holders indirectly. The group made the request in a 57-page response to the European Commission's review of the Markets in Crypto-Assets regulation, known as MiCA, filed on September 22, 2026.

What the central banks are asking for

MiCA already bars stablecoin issuers and licensed crypto-asset service providers (CASPs) from paying interest on e-money tokens. According to the European System of Central Banks' (ESCB) submission, reported by CoinDesk and Unchained, the group said it "continues to support the prohibition on CASPs paying remuneration on stablecoins" but argued the rule is too narrow. The ESCB wants the ban to also apply to unregulated activity such as crypto lending, borrowing and staking, arguing that platforms can otherwise turn stablecoins into "yield-bearing arrangements through lending, staking or other layered structures" without technically paying interest on the token itself. Unchained reported the response also flagged loyalty-program rewards, fee reductions and DeFi liquidity-mining incentives as indirect payments that should be caught by the same rule.

The central banks' underlying argument, in their own words, is that "electronic money is intended to be used for making payments and not as a means of saving." CoinDesk reported the group's concern is that yield-bearing stablecoins blur the line between e-money and bank deposits, potentially letting crypto platforms compete with banks without holding a banking license or capital.

A second proposal: replacing fixed deposit floors with liquidity rules

Alongside the yield-ban request, the ESCB proposed changing how MiCA regulates stablecoin reserves. Current rules require issuers to hold a minimum share of reserves as bank deposits: 30% for standard e-money tokens and 60% for tokens designated "significant," under MiCA Articles 54 and 58, according to Unchained's review of the filing. The central banks want those fixed percentages dropped in favor of requirements tied to how quickly reserve assets can be converted to cash, building on draft European Banking Authority standards that would require significant stablecoins to hold 40% of reserves in assets maturing within one working day and 60% within five days, with lower thresholds of 20% and 30% for other tokens. FinTech Weekly noted the timing: the ECB's own deposit facility rate was raised to 2.50% as of September 16, 2026, meaning banks currently earn a return on stablecoin reserves that holders of the stablecoins themselves cannot legally receive.

Key figures from the filing

What this means for stablecoin holders and issuers

Nothing has changed yet. This is a position paper submitted to a consultation, not an adopted rule. MiCA's stablecoin provisions have applied since June 2024, and the ESCB's letter is one input into the European Commission's broader review of whether that framework needs updating, alongside submissions from industry and other stakeholders, as Cointelegraph reported when the Commission opened the consultation. Any change to the interest ban's scope or the reserve rules would require the Commission to draft a legislative proposal and for that proposal to move through the EU's normal lawmaking process, which typically takes well over a year.

For a reader holding a euro-denominated stablecoin today, the practical takeaway is that direct interest payments from a licensed EU issuer or CASP are already prohibited under MiCA. What the ESCB is targeting is the workaround: a platform that does not pay interest on the token directly but instead pays a return to anyone who lends, stakes or locks it up, achieving a similar economic result. If EU lawmakers adopt the ESCB's recommendation, that workaround would close for EU-regulated platforms; it would not, on its own, extend to platforms operating entirely outside EU jurisdiction, since MiCA's reach applies to CASPs authorized in the bloc.

The reserve-rule proposal is separate and cuts the other way for issuers: replacing a fixed 30%–60% bank-deposit requirement with a liquidity-based test could, depending on how the European Banking Authority's final standards are written, let issuers hold reserves in instruments other than bank deposits as long as those instruments convert to cash quickly. That would reduce banks' exposure to sudden reserve withdrawals if a stablecoin faces a wave of redemptions, which is the contagion risk the central banks describe, but it does not by itself change how stablecoin issuers are supervised or capitalized.

A similar debate is playing out in the United States. Crypto.news reported that the American Bankers Association, the Independent Community Bankers of America and 76 state banking associations pressed for tighter restrictions on stablecoin incentives in July 2026, and that Citigroup CEO Jane Fraser raised comparable concerns about deposit outflows in August. A related U.S. Senate procedural vote on the CLARITY Act failed 50-49 on September 15, 2026, according to the same report. The EU and U.S. debates are separate legislative processes with different rules and timelines, but both center on the same underlying question: whether stablecoin yield draws deposits away from the banking system.

What remains unknown

The European Commission has not said whether it will adopt the ESCB's recommendations, and no date has been confirmed for when a revised MiCA proposal might be published. It is also not yet clear how the European Banking Authority's draft liquidity standards, which the ESCB's proposal builds on, will be finalized, or how EU lawmakers would define which lending, staking and DeFi products fall under an expanded ban. Readers should treat this as a regulatory recommendation from the euro area's and EU's central banking system, not a rule currently in force.