Stablecoin Reserves Need to Be Diverse, EU Bank Agency Chief Says

The European Banking Authority's José Manuel Campa urged crypto players to start managing risks immediately as new rules take effect.

AccessTimeIconApr 27, 2023 at 10:42 a.m. UTC
Updated Apr 27, 2023 at 2:36 p.m. UTC
Drive the Crypto Policy Conversation Forward
October 24, 2023 • Convene • Washington D.C.Where the industry establishes the digital economy’s legal, regulatory and compliance best practices for the future.Register Now

Forthcoming European Union rules to govern stablecoins will focus on ensuring issuers have diverse reserves, manage conflicts of interest and don’t transmit risks to other players, José Manuel Campa, chairman of the European Banking Authority, wrote in article for think tank Eurofi.

The bloc’s Markets in Crypto Assets rules, known as MiCA, are set to take effect next year, but crypto market players should start adjusting their operations now, said Campa, whose agency will play a key role in implementing MiCA by drafting more details of the laws. MiCA was passed by the European Union last week.

MiCA requires issuers of stablecoins to have enough reserves to manage turbulence – and “the EBA will be paying special attention to diversification of the deposit component of the reserve,” Campa wrote.

Campa highlighted the importance of stablecoin issuers mitigating conflicts of interest, and mapping connections to custodians and trading platforms, to ensure risks don’t ricochet within the crypto ecosystem.

Although the law, which licenses wallet providers and exchanges, isn't yet formally etched into the statute book, the “contours of MiCA are, by now, familiar and I would encourage market participants to already adjust their operations” to ensure sound risk management, Campa said.

The collapse of algorithmic stablecoin terraUSD last year prompted regulators to consider how to govern the cryptocurrencies that are pegged to the U.S. dollar or another stable asset.

The November collapse of crypto exchange FTX and revelations of its murky relationship with Alameda Research, an affiliated trading firm, also drew attention to risks posed by large and often complex crypto conglomerates.

“The corporate structures, business models and exposures of the main crypto market participants are not transparent,” Martin Moloney wrote for Eurofi. Moloney is secretary-general of the International Organization of Securities Commissions, which is soon set to publish a consultation on crypto standards that will be made final later in the year.

The risk “is exacerbated by evident market concentration with the three largest so-called trading platforms,” Moloney added.

Edited by Sandali Handagama and Mark Nacinovich.


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Jack Schickler

Jack Schickler is a CoinDesk reporter focused on crypto regulations, based in Brussels, Belgium. He doesn’t own any crypto.

Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to to register and buy your pass now.