European Commission to ease rules on foreign stablecoins despite European Central Bank (ECB) opposition

Proposed European Union advice could increase access to USDC and USDT, despite ECB worries about monetary sovereignty. The European Union is prepared to change its stance on foreign-issued stablecoins, potentially allowing US dollar-backed tokens like as USDC and USDT to flow freely within the EU, the Financial Times reported on June 25. 

According to the article, the European Commission will shortly release legal guidance allowing stablecoins generated outside the EU to be considered equally with their European-registered counterparts.

The action would remove a fundamental regulatory hurdle that has hitherto hindered the use of dollar-backed stablecoins in European financial markets.

The move occurs despite the European Central Bank’s repeated warnings that uncontrolled access to foreign stablecoins might jeopardise financial stability. 

ECB President Christine Lagarde has already encouraged policymakers to strengthen regulations on stablecoin issuers, citing the risk of capital flight and weakened monetary sovereignty.

Under the EU’s Markets in Crypto-Assets (MiCA) law, stablecoin issuers must presently keep the majority of their reserves in EU-based banks and ensure euro-denominated redemption rights.

The proposed amendments would allow global issuers to avoid those restrictions for branded versions of their coins that are already subject to EU oversight. 

The recent passing by the United States Senate of the GENIUS Act, which sets a national framework for stablecoin oversight, has placed pressure on other countries to keep up.

According to multiple unnamed people familiar with the situation, the Commission’s guideline aims to prevent the EU from becoming a “flyover zone” for digital assets, behind faster-moving markets in the United States and Asia. 

The ECB has not officially commented on the planned guidelines, but sources told the FT that internal opposition is still strong. EU authorities are negotiating a solution that would allow national regulators more leeway in analysing the risks associated with foreign stablecoins.

If implemented, the new strategy might mark a watershed moment in the role of US dollar-backed stablecoins in Europe, confirming the dollar’s dominance in digital asset markets while indicating the EU’s ambition to remain a competitive hub for crypto innovation.

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