The European System of Central Banks has called for a prohibition on paying returns on stablecoin holdings, arguing that such assets should function strictly for payments rather than as a means of saving.
The central banks stated in a filing to the European Union that they continue to support the ban on remuneration for stablecoins. The group emphasized that electronic money is intended for making payments, not for generating interest or rewards.
This regulatory push extends beyond services already governed by existing rules. The European System of Central Banks specified that the ban should also cover unregulated activities, including crypto lending, borrowing, and staking. The institutions contend that allowing yield on these digital assets blurs the distinction between electronic money and traditional bank deposits, which could undermine Europe's financial system.
Commercial banks in the region have lobbied against allowing yield on stablecoins and other cryptocurrencies. Their primary concern is that such returns would compete with deposits held in savings and checking accounts.
The debate mirrors discussions in the United States regarding the Clarity Act legislation. In America, eight U.S. banking groups asked legislators to strengthen the bill's limits on stablecoin rewards, warning that crypto platforms might otherwise provide interest-like returns that rival bank deposits. However, the Clarity Act recently failed to advance in the U.S. Senate.
Tether's USDT and Circle Internet Group's USDC are currently the two largest stablecoins in the market.