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09/04 00:53

ECB president calls to address risks from non-EU s

ECB president calls to address risks from non-EU stablecoins

Amid the US set to implement a stablecoin framework after passage of the GENIUS Act, EU officials are looking at the implications of foreign-issued stablecoins.

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Christine Lagarde, president of the European Central Bank (ECB), is calling for policymakers to address gaps in stablecoin regulation, particularly for those issued beyond the “robust” Markets in Crypto-Assets (MiCA) framework in the European Union.

In prepared remarks for the ninth annual conference of the European Systemic Risk Board on Wednesday, Lagarde ​​said EU lawmakers should take steps in situations where an entity covered under MiCA and a non-EU entity jointly issue stablecoins.

She added that such stablecoin issuers should not be allowed to operate in the EU unless there were “robust equivalence regimes” at the source, which included allowing EU investors “to always redeem their holdings at par value” and requiring issuers to fully back their coins.

In the event of a run, investors would naturally prefer to redeem in the jurisdiction with the strongest safeguards, which is likely to be the EU, where MiCAR also prohibits redemption fees,” said Lagarde. “But the reserves held in the EU may not be sufficient to meet such concentrated demand.”

A stablecoin is a cryptocurrency designed to maintain a stable value by pegging it to an asset like the US dollar or the euro.

ECB policymakers have explored the potential rollout of a digital euro for years, but could be pressured by stablecoin laws and regulations pushed by the Trump administration in the US.

The US Congress passed a law in July establishing a framework for stablecoins, likely benefiting issuers of US-pegged coins.

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