The report, co-authored by European Central Bank official Ulrich Bindseil and Blockchain for Europe's Erwin Voloder, identifies two core MiCA restrictions as the primary obstacles: a ban on paying interest to holders, and a requirement that at least 30% of reserves (60% for major issuers) be held as bank deposits. In a positive interest rate environment, the interest prohibition places euro stablecoins at a significant disadvantage compared to bank deposits and foreign currency stablecoins with embedded yield mechanisms. The report argues these combined restrictions trap euro stablecoins in a regulatory "Laffer curve" downturn—where stricter regulation causes the regulated market activity to contract rather than flourish.
The European Union has begun discussions on "MiCA 2.0" amendments. The report recommends replacing rigid reserve ratio requirements with a principles-based framework, allowing a broader range of high-quality euro liquid assets, and permitting large issuers limited access to central bank settlement accounts during extreme market stress. However, the European Banking Authority has warned that proposed technical standard changes could weaken safety safeguards and increase arbitrage risks. The ECB's April macroprudential analysis similarly noted that widespread euro stablecoin adoption could concentrate short-term eurozone government bond demand, potentially affecting yields and liquidity during large redemptions.