tl;dr
The European Commission plans to relax rules on foreign-issued stablecoins, potentially allowing U.S. dollar-backed tokens like USDC and USDT to circulate freely in the EU. This change would treat stablecoins issued outside the EU as equivalent to European-registered ones, easing current restriction...
The European Commission is set to relax rules surrounding foreign-issued stablecoins, potentially enabling U.S. dollar-backed tokens such as USDC and USDT to circulate freely within the European Union. This regulatory shift aims to treat stablecoins issued outside the EU on par with those registered within, easing restrictions established under the Markets in Crypto-Assets (MiCA) regulation.
Currently, MiCA requires stablecoin issuers to hold most reserves in EU banks and offer euro-denominated redemption rights. The proposed relaxation would allow global stablecoin issuers to bypass these constraints for token versions already supervised within the EU. This move comes despite objections from the European Central Bank, which has expressed concerns about financial stability risks and potential impacts on monetary sovereignty.
ECB President Christine Lagarde has cautioned lawmakers about risks such as capital flight stemming from unrestricted foreign stablecoins access. However, the pressure to adapt regulation follows developments like the U.S. Senate’s GENIUS Act, establishing a national stablecoin framework that pushes other jurisdictions to keep pace.
Sources indicate that the Commission’s guidance intends to prevent the EU from becoming a “flyover zone” in digital assets, falling behind fast-moving markets in the U.S. and Asia. The new approach may grant national regulators greater discretion in evaluating foreign stablecoin risks, marking a significant moment for dollar-backed stablecoins’ role in Europe.
Ultimately, this regulatory evolution could reinforce the dominance of the U.S. dollar within Europe’s crypto landscape and underscore the EU’s ambition to maintain competitiveness in the rapidly innovating cryptocurrency market.