Stablecoin issuers found support from an unexpected corner last week: the ECB, joined by all 27 national central banks of the EU.

In their joint response to the Commission's MiCA review, published on Tuesday, the central banks propose scrapping the requirement that stablecoin issuers hold at least 30% of reserves (60% for significant tokens) as bank deposits, one of the regulation's most contested rules.

Quite a turn, given how consistently the ECB has pushed back against stablecoins over the years.

It's also the rule Tether made its main public argument in spring 2024 for refusing to seek MiCA authorization. CEO Paolo Ardoino worried that banks, running on fractional reserves, might not return the money fast enough when holders rush to redeem.

The ECB now shares at least part of that concern, just from the banks' side of the table. Its worry is contagion. A wave of redemptions would force an issuer to pull its deposits quickly, handing banks a liquidity problem they didn't create.

In its place, they suggest simple liquidity buckets, meaning minimum shares of reserves maturing within one and within five working days.

Besides contagion, the paper adds another (rather surprising) concern.

The deposit requirement "reduces issuers' profitability," since sight deposits yield next to nothing (0.53% on average, per the ECB's own data). Adequate issuer profitability, the paper argues, is needed for "a competitive euro-denominated stablecoin market."

It's another sign of how much the ECB worries about dollar stablecoin dominance.

None of this is an embrace of crypto business models, though. The same paper asks for the yield ban to be extended beyond MiCA-regulated services, into crypto lending, staking and certain indirect rewards such as loyalty-programme benefits.

The net of it: issuers get to earn more, holders still earn nothing, and it’s all about financial stability.

IN TODAY’S BRIEFING:

  • Raiffeisen Bank International expands partnership with Bitpanda

  • Absa becomes first African bank to launch digital asset custody

WITH INSIGHTS FROM

Robyn
Lawson
Absa Bank

Wiehann
Olivier
Forvis Mazars

HIGH SIGNAL NEWS

TOP STORY

Absa Becomes First African Bank to Launch Digital Asset Custody Service

An African first: This week, Absa became the first African bank to launch digital-asset custody, initially for institutional, corporate and large business-banking clients. As one of Africa’s largest banks, Absa operates across ten African markets and serves over twelve million customers. Its new service runs on Ripple’s custody technology and initially supports bitcoin, XRP, USDC and RLUSD.

  • Why it matters: Until now, much of Africa’s crypto activity has grown outside traditional banking channels, driven by remittances, cross-border trade and demand for dollars in markets with less stable local currencies. South Africa’s largest banks are now trying to bring part of that activity inside regulated banking. Unlike many European peers, which entered through crypto trading and investment products, their early focus is on stablecoins, treasury management and more efficient cross-border payments.

Custody first: Custody sits at the foundation of Absa’s strategy. According to Robyn Lawson, Head of Digital Product: Custody at Absa CIB, the bank began looking seriously at digital assets around 2022 and spent roughly three years moving from experiments into production.

  • “A bank’s role is to keep its clients’ assets safe. If clients trust us with their traditional financial assets, why wouldn’t they trust us with their digital assets as well? But custody is only the starting point. What we ultimately want to provide is wallet infrastructure that enables clients to participate in a broader ecosystem without compromising our responsibility to safeguard their assets. As a bank, that is not something we want to outsource,” Lawson told Blockstories.

A dollar market: Absa is building those wallets for a market that already uses crypto primarily to gain dollar exposure. The bank estimates that the vast majority of balances held on South Africa’s five largest crypto exchanges are in stablecoins, predominantly USDT.

Common strategy: That dollar demand is also visible in the digital assets strategies South Africa’s other large banks are pursuing. Nedbank is working with Crypto.com on rand-to-USDC conversion, dollar liquidity and settlement, while FirstRand uses J.P. Morgan’s Kinexys to move dollars between group entities around the clock.

  • Standard Bank goes further: Africa’s largest bank by assets has already processed more than R1 trillion (roughly $61 billion) through Aroko, its blockchain-enabled cross-border settlement rail. It is also the only African member of a 21-institution consortium alongside Bank of America, Santander and UBS that plans to launch a US-dollar stablecoin in the first half of 2027, with other G7 currencies intended to follow.

The 8.46% problem: For all four South African banks, the common thread is building digital assets infrastructure to move money more efficiently. Domestic payment systems in South Africa work well, but cross-border flows still have to bridge separate currencies, banking networks and settlement systems. Sending $200 to Sub-Saharan Africa costs 8.46% on average according to the World Bank, the highest of any region. Stablecoins provide banks with another way to move dollar value across markets without passing through the same chain of correspondent accounts and settlement windows.

A head start on rules: South Africa has been able to move first because the institutional groundwork is already there. The FSCA, South Africa’s market conduct regulator, has licensed crypto service providers for several years, while the central bank has tested DLT with the country’s major banks since Project Khokha in 2018. Other markets have more crypto users but give their banks less room.

What comes next: Absa plans to take custody into additional client segments and, over time, across its nine other African markets. How far that extends into cross-border payments will partly depend on South Africa’s evolving exchange-control framework. Draft rules published in August would bring certain crypto transfers into the country’s exchange-control framework, potentially giving regulated banks a clearer route to offer those services. Comments close on 30 September.

  • “Regulators recently issued draft guidelines on exchange controls, which are currently open for public comment. For regulated institutions such as banks, this could create significant opportunities to use digital assets for cross-border payments in South Africa,” Lawson said.

Wiehann Olivier is a Partner at Forvis Mazars South Africa and serves as the firm’s Global Co-Head of Digital Assets.

As of today, which African markets are seeing the strongest digital asset adoption, and what is driving it?

South Africa and Nigeria stand out, alongside Ghana and Kenya, as some of Africa’s most active digital asset markets. Their established fintech ecosystems have helped build momentum. In South Africa, all major banks are working on digital asset initiatives, although many of these projects have yet to reach the market.

For banks and payment fintechs, the opportunity lies largely in moving money across borders. South Africa’s domestic payment systems work well, but payments and foreign exchange between African countries remain more difficult and costly. M-Pesa, a mobile money service widely used in Kenya, illustrates the challenge: a platform can achieve widespread adoption in one country without connecting seamlessly to payment systems elsewhere. Stablecoins could provide a common settlement layer between these systems, improving interoperability and making cross-border payments and currency conversion easier.

Access to dollars is another important use case, with fintechs playing a central role in meeting that demand. In countries where people are concerned about currency depreciation or inflation, some convert part of their income into dollar-backed stablecoins and draw on those holdings as needed. That motivation is less pronounced in South Africa, where the rand has been relatively stable recently.

Sequence matters.
Illustration: Blockstories

  1. Wholesale Digital Markets Champion: First Report (UK, July 2026) — As developments in recent months have shown, the UK is stepping up its efforts to tokenize wholesale financial markets. The report calls for a coordinated national roadmap, with live use cases starting with an end-to-end repo transaction, to help the country shape the standards and infrastructure of emerging tokenized markets.

  2. Cross-border payments in 2040: five hypotheses for a multi-rail future (Deutsche Bank) — This paper explores how geopolitical fragmentation, new forms of money and AI could reshape cross-border payments by 2040. Across five hypotheses, Deutsche Bank argues that banks will increasingly need to connect different payment networks, move liquidity between them and manage risk consistently, rather than rely on a single payment rail.

→ Want more? Visit Blockstories Library for a curated selection of 120+ reports on digital assets.

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Disclaimer: The information provided in the Institutional Briefing by Blockstories does not constitute investment advice. Accordingly, we assume no liability for any investment decisions made based on the content presented herein.

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