- The European Commission downplayed the risk of bank runs linked to stablecoins after concerns raised by the European Central Bank.
- The Commission stated that redemptions of foreign-held tokens would mainly occur outside Europe, limiting risks to the EU banking system.
- The Commission’s latest analysis found that strong regulatory barriers make widespread use of foreign stablecoins in the euro area unlikely.
- Industry observers said the Commission’s approach supports global operation of stablecoins and is a positive sign for issuers.
- The Commission cited stricter EU regulations as a reason why major stablecoin issuers like Tether have avoided registering in Europe.
The European Commission has offered an optimistic assessment of stablecoin risks in the European Union, saying that the risk of bank runs from the multi-issuance of stablecoins is “highly unlikely.” This comes in response to earlier warnings from the European Central Bank (ECB), which had called attention to possible financial stability threats from stablecoin issuance both in Europe and from third countries.
A spokesperson for the European Commission told Cointelegraph, “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 US, where most tokens circulate and the bulk of reserves are held.” This statement followed the release of an in-depth analysis on stablecoins and the digital euro’s role in European monetary policy.
The ECB had warned in April that a multi-issuance scheme involving EU and foreign stablecoins could weaken Europe’s rules for electronic money token (EMT) issuers. According to the ECB, such schemes could raise the likelihood of bank runs, as issuers might lack enough reserve assets under EU supervision to cover redemption demands from both EU and non-EU token holders. The ECB also noted potential threats to financial stability, consumer protections, and EU regulatory standards. The full ECB warning can be found in this non-paper.
Addressing these concerns, the Commission’s June paper, “Stablecoins and digital euro: friends or foes of European monetary policy?” concluded that existing EU regulations and operational barriers limit the likelihood of large-scale foreign stablecoin use in the euro area. The Commission highlighted that the Markets in Crypto-Assets Regulation (MiCA) discourages major issuers from entering the European market. For example, Tether chose not to comply with MiCA’s requirement to keep at least 60% of reserves in European banks.
The Commission also clarified that rules already allow for mechanisms that require stablecoin issuers to match their EU-held reserves with the share of their tokens that circulate in the EU. The approach was welcomed by members of the MiCA Crypto Alliance and industry stakeholders. Juan Ignacio Ibañez said that the policy supports a model where stablecoin issuers can operate both inside and outside the EU without needing to split tokens, calling it “very positive news and even a relief,” and noting the importance of cross-border usability for stablecoins.
The analysis follows recent developments, including Coinbase securing a MiCA license and establishing Luxembourg as its EU headquarters, as noted in a related report.
✅ Follow BITNEWSBOT on Telegram, Facebook, LinkedIn, X.com, and Google News for instant updates.
Previous Articles:
- Iranian Hackers Launch AI-Driven Phishing Attacks on Israelis
- Nasdaq Integrates Canton Blockchain for 24/7 Collateral Management
- Pepe Meme Coin Drops 4.7% as Investor Interest Fades Further
- WhatsApp Rolls Out AI Message Summaries with Advanced Privacy
- Opyl Turns to Bitcoin Treasury as Cash Crisis Deepens
