Christine Lagarde, president of the European Central Bank (ECB), has urged policymakers to close regulatory gaps around stablecoins, especially those issued outside the European Union’s “robust” Markets in Crypto-Assets (MiCA) framework.
Speaking at the ninth annual conference of the European Systemic Risk Board on Wednesday, Lagarde said EU lawmakers should act in cases where a MiCA-regulated entity partners with a non-EU entity to issue stablecoins.
She stressed that such issuers should not be allowed to operate in the EU unless their home countries had “robust equivalence regimes.” These should guarantee that EU investors can always redeem their coins at face value and that issuers fully back their tokens with reserves.
“In a crisis, investors would naturally choose to redeem in the jurisdiction with stronger protections, which is likely to be the EU, since MiCA also bans redemption fees,” Lagarde explained. “But reserves held in the EU may not be enough to handle that surge in demand.”
Stablecoins are cryptocurrencies that aim to keep a steady value by tying themselves to assets such as the U.S. dollar or the euro.
ECB demands strict rules for non-EU stablecoin issuers
She stressed that such issuers should not be allowed to operate in the EU unless their home countries had “robust equivalence regimes.” These should guarantee that EU investors can always redeem their coins at face value and that issuers fully back their tokens with reserves.
“In a crisis, investors would naturally choose to redeem in the jurisdiction with stronger protections, which is likely to be the EU, since MiCA also bans redemption fees,” Lagarde explained. “But reserves held in the EU may not be enough to handle that surge in demand.”
Stablecoins are cryptocurrencies that aim to keep a steady value by tying themselves to assets such as the U.S. dollar or the euro.
ECB explores digital euro amid U.S. stablecoin pressure
The ECB has been studying the idea of launching a digital euro for several years. However, the effort could face added pressure from stablecoin rules and regulations being advanced by the Trump administration in the United States.
“The US government’s policies could potentially result not just in further losses of fees and data, but also in euro deposits being moved to the United States and in a further strengthening of the role of the dollar in cross-border payments,”
Piero Cipollone -ECB executive board member -April, 2025.
With a U.S. law about to take effect and the EU still debating its stance on stablecoins, China may also be preparing to launch a yuan-backed token.
