European Commission Softens Tone on Stablecoin Risks, Eases Industry Fears

European Commission Softens Tone on Stablecoin Risks, Eases Industry Fears

Brussels pushes back on ECB’s warning, citing MiCA’s strong safeguards

EU Dismisses Bank Run Fears on Foreign Stablecoins

In a firm yet measured rebuttal of the European Central Bank’s (ECB) recent warning on stablecoins, the European Commission (EC) has signaled that the risks of jointly issued stablecoins—particularly with third countries like the United States—are “highly unlikely” under current regulations.

“Even in the highly unlikely event of a run on a jointly issued token, redemptions by foreign holders would primarily occur in jurisdictions like the U.S.,” an EC spokesperson told Cointelegraph.

The comments mark a notable shift in the regulatory tone, coming just months after the ECB’s April non-paper raised alarms over joint issuance between EU-based and foreign issuers, which it said could endanger consumer protections and financial stability.

ECB’s April Warning Sparked Industry Uncertainty

In its April memo, the ECB warned that multi-issuance stablecoin schemes between the EU and third countries could weaken oversight, leaving EU-based issuers without enough supervised reserve assets to satisfy redemption demands.

The ECB added that such schemes could:

• Undermine MiCA protections,

• Enable non-EU firms to exploit regulatory gaps, and

• Create systemic risks by allowing foreign issuers to claim EU compliance without meeting its standards.

Commission Counters with Institutional Barriers and MiCA Power

In June, the European Commission published a detailed analysis titled “Stablecoins and Digital Euro: Friends or Foes of European Monetary Policy?” The report argues that robust institutional and regulatory hurdles already limit stablecoin expansion in the eurozone.

Among the key observations:

• The Markets in Crypto-Assets Regulation (MiCA) framework has discouraged large foreign issuers, such as Tether, from registering in Europe.

• Tether reportedly refused to comply due to requirements to hold 60% of reserves in EU banks.

• Issuers can be mandated to implement rebalancing mechanisms ensuring reserve levels match token holdings within the EU.

Industry Welcomes Commission’s Fungibility Stance

The new stance has been met with optimism across the crypto sector, particularly from MiCA proponents.

Juan Ignacio Ibañez, general secretary of the MiCA Crypto Alliance, said the decision avoids jurisdictional silos and upholds stablecoin fungibility.

“This is very positive news and even a relief,” Ibañez said.
“A major component of a stablecoin’s value lies in its cross-border usability. Enforcing jurisdictional silos would undermine this feature and degrade the EU user experience.”

In practical terms, this means issuers like Circle will not be forced to distinguish between USDC-EU and USDC-US, preserving seamless usage and redemption across borders.