Just a day after unveiling Pontes, its system for settling tokenised assets in central bank money, the European Central Bank (ECB) has laid out its vision for a stricter European crypto framework. The response, published on Tuesday by the European System of Central Banks (ESCB)—which groups the ECB with the national central banks of the EU's twenty-seven member states—argues for tighter controls on stablecoins, staking, and the firms that operate in the sector.
The document feeds into the European Commission's review of the Markets in Crypto-Assets Regulation (MiCA), the EU's comprehensive rulebook for cryptocurrencies and their service providers. MiCA has been in force since December 2024, and the final transitional deadline for existing operators expired on 1 July, forcing even the world's largest exchange, Binance, to stop serving European customers. The Commission's public consultation, originally scheduled to close in August, has been extended to 30 September.
The central banks' recommendations are not binding, but they carry weight. The Commission will weigh them alongside other submissions before deciding whether to reopen the legislation. EU diplomats have indicated to Euronews that a revision is expected in 2027, requiring approval from both the European Parliament and the Council of the EU.
No interest, no loopholes
Stablecoins are cryptocurrencies designed to maintain a steady value, typically by pegging to the US dollar. MiCA already prohibits issuers and exchanges from paying interest on them, and the ESCB wants that prohibition preserved. "The payment of stablecoin remuneration should continue to be prohibited," the response states.
But the central banks are targeting the workarounds. Some exchanges offer crypto lending, borrowing, and staking services that "replicate the economic effect of interest payments through ancillary or unregulated services," the response notes. The ESCB wants the ban extended to these activities and to indirect rewards, such as certain loyalty-programme benefits, calling it "a clear legislative priority."
This stance contrasts sharply with developments in Washington. The 2025 GENIUS Act banned US stablecoin issuers from paying interest but left exchanges free to offer rewards. Whether to close that gap became a major point of contention in the CLARITY Act, the landmark crypto bill that fell ten votes short in the US Senate on 15 September.
A brake on dollar-pegged stablecoins
The central banks also want stronger tools to counter tokens pegged to foreign currencies, particularly the US dollar. They propose giving authorities the power to impose "a prohibition to issue new tokens, as well as an obligation to redeem existing tokens" on issuers when those tokens pose a threat to financial stability or other public interests.
More broadly, the ESCB sees limited benefit in stablecoins for everyday payments within the EU, given the availability of instant bank transfers and the planned digital euro. They warn that MiCA provides no legal basis for issuing the same stablecoin both inside and outside the EU. In a bank run, European reserves could end up paying holders elsewhere, while "EU authorities cannot determine with certainty how many tokens are held within the Union."
Eurozone central banks currently do not allow stablecoin issuers to hold customer funds with them. A token fully backed by central bank money, the response warns, "would effectively result in a 'synthetic' central bank digital currency"—essentially a private imitation of the digital euro that could, in theory, drain deposits from commercial banks, especially under stress.
Staking and decentralised finance
On staking—where users lock up crypto in exchange for rewards—the response is blunt: "Staking, lending and borrowing of crypto-assets should be regulated at Union level." Where a firm takes customers' crypto and promises to return it, potentially with a premium, the central banks argue that the arrangement can be "comparable to the taking of repayable funds," in the language of banking.
The same logic applies to decentralised finance (DeFi), where lending and trading run on automated software rather than through a company. MiCA exempts fully decentralised services but never defines the term. The central banks cite studies showing that full decentralisation is rarely, if ever, achieved, leaving it unclear who is in control.
Who licenses crypto exchanges?
The ESCB also backs a Commission proposal to move licensing and supervision of crypto firms from national regulators to the European Securities and Markets Authority (ESMA), the EU's markets watchdog. Currently, a single national licence covers the whole bloc—the route Binance originally pursued in Greece.
The Wall Street Journal reported last week, citing people familiar with the discussions, that ECB President Christine Lagarde urged Greek Prime Minister Kyriakos Mitsotakis not to approve Binance's application because of the exchange's past compliance problems and fears that its scale could deepen the use of US dollar stablecoins in Europe. A senior Greek regulator, according to the newspaper, told the exchange that Lagarde wanted the decision delayed until ESMA took over—the same shift the central banks endorse in Tuesday's response. Binance withdrew its application on 24 June.
Neither the ECB nor the Greek regulator has confirmed the account. The ECB, which has no formal role in licensing crypto firms, declined to comment, while Binance said it would "not comment on speculation."
The ESCB's intervention comes as the EU continues to build out its digital finance infrastructure, including the Pontes settlement system. The debate over crypto regulation also intersects with broader efforts to protect consumers online, such as the EU Kids Act for minors. As the Commission reviews MiCA, the central banks' push for tighter rules will likely shape the next iteration of Europe's crypto rulebook.
