The European Union is intensifying its scrutiny of stablecoins while actively charting a course towards its own digital currency. Amid growing concerns over financial stability and sovereign control, a key EU oversight body has recommended stricter measures against certain digital assets, even as the bloc accelerates its plans for a euro-backed digital alternative.
Mounting Pressure on Multi-Jurisdictional Stablecoins
A significant development sees the European Systemic Risk Board (ESRB), an EU body tasked with responding to financial crises, reportedly pushing for a ban on stablecoins issued across multiple jurisdictions. This recommendation, though not legally binding, signals a strong intent to compel authorities to restrict the operations of issuers like Circle and Paxos within the EU. This move follows previous warnings from prominent figures such as European Central Bank (ECB) President Christine Lagarde and an Italian central bank official, who highlighted potential regulatory gaps and financial stability risks posed by non-EU issued stablecoins, particularly those not anchored to the euro. The policy reflects a growing concern over the dominance of dollar-pegged stablecoins like Tether (USDt) in the region.
The EU's Drive for a Digital Euro
Concurrently with its efforts to regulate existing stablecoins, the EU is making significant strides in developing its own digital currency, the digital euro. Since 2021, officials have been exploring the potential launch of such a currency, with ECB executive board member Piero Cipollone indicating that member states could reach an agreement on its design by the end of the year, potentially leading to a launch by 2029. The initiative aims to provide a "safe, reliable, and universally accessible central bank money for the digital age," working in tandem with physical cash to bolster Europe's financial resilience and maintain its leadership in the global monetary landscape.
