MiCA Amendments Could Undermine Liquidity Safeguards For Stablecoins, Says EBA

The European Banking Authority (EBA) has issued two formal Opinions (links and ) challenging the European Commission’s proposed amendments to the draft Regulatory Technical Standards (RTS) governing the composition and liquidity of reserve assets under the Markets in Crypto-Assets Regulation (MiCA). The EBA warned that the proposed revisions could undermine the prudential soundness of MiCA’s framework, fragileen alignment with banking-sector liquidity rules, and open the door to regulatory arbitrage across financial institutions.

On 28 August 2025, the Commission informed the EBA of its intention to endorse, with amendments, the RTS specifying highly liquid financial instruments (HLFIs) and the liquidity requirements of asset reserves that back stablecoins — including asset-referenced tokens (ARTs) and e-money tokens (EMTs). These changes, the EBA argues, would allow for the inclusion of non-HLFI assets such as commodities and crypto-assets within reserves, a step the Authority deems incompatible with MiCA’s core articles on prudential securety and liquidity risk management.

While the Commission framed its amendments as measures to ensure flexibility and alignment with the underlying reference assets, the EBA’s Opinions stress that such allowances violate the letter and spirit of Articles 36(1)(b) and 38(1) of MiCA, which require that reserves remain immediately and reliably convertible into funds without material loss — especially under stressed conditions.

Takeaway

EBA Rejects Non-HLFI Investments As Reserve Assets

The EBA’s primary concern centers on the Commission’s apparent greenlight for non-HLFI investments. In its Opinion on Liquidity Requirements, the Authority noted that the proposed changes could be interpreted as permitting issuers of ARTs to invest issuance proceeds into illiquid assets — including commodities and crypto-assets — rather than maintaining reserves composed solely of highly liquid instruments such as cash, government securities, or reverse repos terminable within one to five days.

The EBA emphasized that this interpretation directly conflicts with MiCA’s provisions, as issuers receiving proceeds in cash must redeem in cash. Allowing reserves to include volatile assets introduces a liquidity mismatch during redemption surges. “Redemptions are quoted on receipt but settled at T+2, and during that window commodities or crypto can become illiquid or suffer material price declines,” the Opinion warned, “amplifying redemption externalities”.

Furthermore, the Authority highlighted a fundamental inconsistency: under the existing Liquidity Coverage Ratio (LCR) rules for banks, commodities and crypto-assets are not recognized as (HQLA). Yet, under the Commission’s draft, ART issuers could use them to satisfy liquidity requirements — an inconsistency that “invites regulatory arbitrage and fragileens harmonization,” the EBA said.

Takeaway

Commission’s Liquidity Calibration Rejected As “Unsound”

In its assessment of the Commission’s revised liquidity thresholds, the EBA objected to the removal of its original “1-day” and “5-day” liquidity buckets, which required 20–40% of reserves to be convertible within a day and 30–60% within five days, depending on whether a token is classified as “significant.” Instead, the Commission proposed a simplified requirement for “additional HLFIs” amounting to only 10% for non-significant and 20% for significant ARTs.

The EBA criticized this reduction, calling it a dilution of MiCA’s prudential intent. “Replacing calibrated liquidity buckets with a single percentage fragileens secureguards against redemptions under stress,” the Authority said. Such simplification “legitimizes large holdings of non-HLFI in the reserve of assets, while relying on a relatively small proportion of HLFIs to cover outflows.”

By removing the maturity-based calibration, the EBA argues that the Commission’s proposal undermines the alignment between MiCA and existing EU banking standards, including the (EU 2017/1131) and Delegated Regulation (EU) 2015/61 on LCR compliance. It also raises questions about the consistency of prudential expectations between crypto-asset issuers and credit institutions.

Takeaway

EBA Calls For Legal Clarity And Consistency Under MiCA

The EBA’s Opinions also aim to clarify the legal boundaries of “referenced assets” under Article 38(1) of MiCA. The Commission’s amendments to Recital 3 introduced the term “include,” which could be interpreted as allowing issuers to actively invest reserve funds into the assets referenced by their tokens — such as gold or crypto baskets. The EBA pushed back firmly, asserting that “include” should apply only to assets contributed in kind by subscribers at issuance, not to any investment activity using cash proceeds.

“Issuers may redeem in kind only where holders have subscribed in kind,” the Opinion explains. “No liquidity risk arises in that case, as no conversion into funds is required.” But if issuance proceeds are received in cash, the reserve must remain composed entirely of HLFIs — ensuring redemptions can be honored in cash without delay or loss.

The EBA’s revised text for Recital 3 thus limits non-fiat reserve composition strictly to these in-kind cases. The Authority also reasserted that liquidity requirements — such as the mandatory proportion of short-maturity assets — must remain intact for all ARTs referencing fiat or non-fiat assets to uphold MiCA’s prudential integrity.

Takeaway

Balancing Flexibility And Prudence: The Broader MiCA Context

Behind the technical dispute lies a larger policy tension: how to balance the innovation-driven flexibility sought by the European Commission with the prudential caution championed by the EBA. MiCA — which entered into force in mid-2023 — aims to harmonize the regulation of stablecoins, crypto-assets, and service providers across the European Union. Its success depends on ensuring that stablecoin issuers maintain reserves robust enough to withstand redemption shocks without destabilizing broader markets.

While the Commission’s amendments sought to ease operational constraints and expand permissible reserve compositions, the EBA warned that such changes could erode the “bank-like” secureguards MiCA intended to replicate for large-scale stablecoin issuers. “Allowing ART issuers to invest in non-HLFI assets while banks cannot count such assets as HQLA creates a prudential inconsistency,” the EBA wrote, noting that liquidity risks under MiCA may be “at least as acute as in banking”.

The Authority’s response also underscores the systemic implications of . With MiCA-designed tokens expected to interact directly with payment systems and capital markets, any fragileening of liquidity standards could trigger cross-sector contagion during stress events — precisely the type of risk MiCA was created to contain.

Takeaway

Inside The Second Opinion: Reserve Composition And Concentration Controls

The second Opinion — addressing the RTS on the composition of the reserve of assets — further reinforces the EBA’s concerns. The Authority emphasized that money market funds cannot automatically qualify as highly liquid and that concentration and look-through limits must remain in place to avoid risk accumulation. The Commission’s attempt to classify all money market funds as HLFIs, the EBA said, “introduces material liquidity risk and departs from established prudential definitions.”

In the accompanying annexes, the EBA detailed additional parameters for managing liquidity risk, including mandatory over-collateralization of reserve assets and concentration limits by counterparty. These provisions require that no single credit institution hold more than 25% of the reserve for global or other systemically significant institutions, 15% for large institutions, and 5% for smaller ones. Moreover, exposure to any one bank, including securities or derivatives issued by it, cannot exceed 30% of total reserves.

In cases of non-compliance, issuers must submit a restoration plan to their within five business days — a measure designed to ensure continuous supervision and ahead remediation of liquidity shortfalls.

Takeaway

Looking Ahead: A Regulatory Crossroads For MiCA Implementation

The EBA’s public disagreement with the Commission underscores the complexity of finalizing MiCA’s technical implementation. While the Commission retains the authority to adopt the RTS — with or without amendments — the EBA’s Opinions carry significant weight in shaping final outcomes. The dispute also signals that EU policymakers are far from unified on how aggressively to regulate stablecoins at a time when global frameworks, such as the , are converging toward stricter oversight.

For stablecoin issuers and service providers preparing for MiCA compliance in 2025–2026, the uncertainty may delay investment decisions and product rollouts. The final text of the RTS will determine whether the EU’s crypto-asset regime aligns with conservative liquidity norms akin to banking, or takes a more flexible — and potentially riskier — approach to reserve management.

Ultimately, the EBA’s stance reflects a clear message: prudential rigor must not be sacrificed for convenience. “Where issuance proceeds are received in cash, redemptions are also in cash,” the Authority wrote — a line that encapsulates its position that liquidity must remain real, immediate, and bank-grade under MiCA.

Takeaway