Briefing
The European Banking Authority (EBA) has formally rejected the European Commission’s (EC) proposed substantive amendments to the Markets in Crypto-Assets Regulation (MiCA) Regulatory Technical Standards (RTS) governing stablecoin reserve assets. This decisive action immediately mandates that Asset-Referenced Token (ART) and E-Money Token (EMT) issuers must adhere to the EBA’s original, more stringent prudential standards, thereby preventing a systemic weakening of the collateral framework. The core consequence is the EBA’s assertion that the EC’s changes are inconsistent with Articles 36(1)(b) and 38(1) of MiCA, which govern reserve asset composition and liquidity requirements.
Context
Prior to this intervention, the MiCA framework for stablecoins was intended to establish a harmonized, robust prudential standard across the EU, specifically requiring reserve assets to be highly liquid and low-risk to ensure redemption stability. The prevailing compliance challenge was the political pressure to potentially relax these standards to foster market growth, creating a legal uncertainty regarding the final composition of the reserve. The EC’s proposed amendments, which the EBA cited as allowing for non-highly liquid investments like commodities or crypto-assets, represented a direct challenge to the original legislative intent of aligning crypto-asset reserve liquidity with the traditional banking framework.
Analysis
This EBA Opinion directly alters the operational requirements for stablecoin issuers’ Treasury and Risk Management systems. The cause is the EBA’s defense of financial stability, which mandates that reserve assets meet a rigorous “highly liquid financial instruments” (HLFI) standard. The effect is that issuers must maintain stricter concentration limits and cannot utilize issuance proceeds for non-HLFI investments, such as certain crypto-assets or commodities, which the EC’s proposal might have permitted. Regulated entities must now audit their reserve asset composition and liquidity stress-testing models against the EBA’s original, conservative prudential framework, ensuring zero scope for the regulatory arbitrage the EBA explicitly warned against.
Parameters
- Key MiCA Provisions ∞ Articles 36(1)(b) and 38(1). The specific sections of MiCA governing reserve asset composition and liquidity requirements that the EBA asserts the EC’s amendments violate.
- EBA Action Date ∞ October 10, 2025. The date the European Banking Authority published its two Opinions formally rejecting the European Commission’s proposed changes to the RTS.
- Primary Risk Cited ∞ Material liquidity risk. The EBA’s central justification for the rejection, arguing the EC’s amendments would weaken alignment with the banking liquidity framework.
- Targeted Tokens ∞ Asset-Referenced Tokens (ARTs) and E-Money Tokens (EMTs). The stablecoin categories under MiCA whose reserve requirements are the subject of the dispute.
Outlook
The immediate next phase involves the EC’s response, which can either adopt the EBA’s original RTS or proceed with its amended version, triggering a potential political conflict at the highest level of EU financial governance. This firm stance by the EBA sets a strong precedent for other jurisdictions, signaling that prudential regulators will prioritize financial stability and alignment with traditional banking liquidity standards over legislative proposals that introduce risk to foster innovation. The second-order effect is a likely deceleration in the issuance of more complex, multi-asset-backed ARTs until the final, conservative reserve standards are definitively settled.
Verdict
The EBA’s rejection decisively reinforces the European Union’s conservative regulatory architecture, establishing that stablecoin reserve integrity will be governed by stringent banking liquidity principles, not political expediency.
