Since the dawn of time, Europe and the United States have been playing musical chairs when it comes to regulation. Crypto is no exception, and the Old Continent, with its appetite for rules, could well attack a major part of the ecosystem: multi-issue stablecoins. This is the barbaric nickname given by the European Systemic Risk Board (ESRB) to stablecoins that are issued both in the Union and in other jurisdictions, such as the United States. We take stock.
Key points of this article:
Why does Europe want to ban these stablecoins?
According to sources reported by Bloomberg, the ESRB, the guardian of European financial stability, has issued a recommendation that sends chills down the spines of crypto players. The body fears that these stablecoins represent a systemic risk . In short, if one of the foreign issuers were to go bankrupt or encounter difficulties, this could have cascading repercussions for the European financial system.
The ESRB is not alone in its fight. The European Central Bank (ECB) , as an overprotective big sister, has already expressed its reservations on numerous occasions, as we explain in this article. It sees these stablecoins as a threat to the monetary sovereignty of the euro, especially when their reserves are mostly in dollars, invested in American assets. It is also a way of “making room” for the future digital euro , the CBDC (Central Bank Digital Currency) that the ECB has in its pipeline.
Which stablecoins are affected by this measure?
If the ban is implemented, it would directly target the American giants in the sector . One example is Circle , the issuer of USDC , the second-largest stablecoin in the world. Another major player, Paxos , the issuer of USDP , operates in both the United States and Europe.
These companies would be forced to rethink their approach. They could be forced to create separate subsidiaries for the EU or, more simply, limit access to their stablecoins for European residents. It’s a difficult dilemma: comply with European regulations at the risk of fragmenting their global ecosystem, or withdraw from a very promising market.
What does this mean for the European crypto market?
For the market, the consequences could be significant, although of course, the conditional remains in place. USDC is a pillar of the ecosystem , used by millions of investors to protect themselves from the volatility of cryptocurrencies. Seeing it disappear from the European landscape would create a vacuum and could isolate the European market. Of course, there are alternatives, such as Tether’s USDT, already banned from the EU , but competition would be reduced and the credibility of stablecoins could be undermined by this regulatory action.
This offensive is in line with the MiCA (Markets in Crypto-Assets) regulation adopted in 2024, which already very strictly regulates stablecoins. But this new recommendation from the ESRB goes further, creating a new layer of complexity. It remains to be seen whether Europe risks slowing its own development in the digital asset sector by firing a warning shot at the market’s most established players.
Source: journalducoin.com
According to sources reported by Bloomberg, the ESRB, the guardian of European financial stability, has issued a recommendation that sends chills down the spines of crypto players. The body fears that these stablecoins represent a systemic risk . In short, if one of the foreign issuers were to go bankrupt or encounter difficulties, this could have cascading repercussions for the European financial system.
The ESRB is not alone in its fight. The European Central Bank (ECB) , as an overprotective big sister, has already expressed its reservations on numerous occasions, as we explain in this article. It sees these stablecoins as a threat to the monetary sovereignty of the euro, especially when their reserves are mostly in dollars, invested in American assets. It is also a way of “making room” for the future digital euro , the CBDC (Central Bank Digital Currency) that the ECB has in its pipeline.
If the ban is implemented, it would directly target the American giants in the sector . One example is Circle , the issuer of USDC , the second-largest stablecoin in the world. Another major player, Paxos , the issuer of USDP , operates in both the United States and Europe.
These companies would be forced to rethink their approach. They could be forced to create separate subsidiaries for the EU or, more simply, limit access to their stablecoins for European residents. It’s a difficult dilemma: comply with European regulations at the risk of fragmenting their global ecosystem, or withdraw from a very promising market.
For the market, the consequences could be significant, although of course, the conditional remains in place. USDC is a pillar of the ecosystem , used by millions of investors to protect themselves from the volatility of cryptocurrencies. Seeing it disappear from the European landscape would create a vacuum and could isolate the European market. Of course, there are alternatives, such as Tether’s USDT, already banned from the EU , but competition would be reduced and the credibility of stablecoins could be undermined by this regulatory action.
This offensive is in line with the MiCA (Markets in Crypto-Assets) regulation adopted in 2024, which already very strictly regulates stablecoins. But this new recommendation from the ESRB goes further, creating a new layer of complexity. It remains to be seen whether Europe risks slowing its own development in the digital asset sector by firing a warning shot at the market’s most established players.
Source: journalducoin.com
Source: journalducoin.com
Source: journalducoin.com
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