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European Commission says existing rules address stablecoin risks
Europe's crypto rules do enough to address the risks around stablecoins, the European Commission said on Friday, indicating no major changes are needed despite the European Central Bank's call for more safeguards.
Stablecoins, which are cryptocurrencies pegged to real-world currencies, represent one of the fastest-growing areas of the digital assets industry. Earlier this year, the U.S. passed legislation to promote their usage.
Europe has introduced a comprehensive set of crypto-specific rules, though lawmakers in Brussels are under pressure from the ECB to prevent the "multi-issuance" stablecoin model.
ECB Calls for Safeguards
The core debate revolves around whether a multinational stablecoin company can consider tokens it issues within the EU as interchangeable with those held outside the EU.
In a letter addressed to European Commissioner Maria Luis Albuquerque, six crypto industry associations, including major stablecoin issuer Circle, urged the EU to publish guidance affirming "multi-issuance in principle" and clarify its operation under the EU's crypto regulation, known as MiCA.
"We believe MiCA provides a robust and proportionate framework for addressing risks stemming from stablecoins," a Commission spokesperson said, acknowledging receipt of the letter. "The Commission is working towards providing such clarification as soon as possible."
The European Systemic Risk Board, headed by ECB President Christine Lagarde, has expressed concerns that the multi-issuance structure could pose financial stability risks and has called for urgent safeguards.
The ECB fears that individuals holding tokens created by a stablecoin's non-EU entity might choose to redeem them with the EU entity, potentially leading to a run on reserves held within the EU.
However, stablecoin issuers argue they can ensure sufficient reserves to meet redemption requests, regardless of their location.
JP Morgan analysts recently noted that 99% of the stablecoin supply is pegged to the dollar and anticipate that the sector's growth will increase demand for the greenback.
This article has been published in reuters.com via Yahoo News.
European Commission says existing rules address stablecoin risks
(Reuters) -Europe's crypto rules do enough to address the risks around stablecoins, the European Commission said on Friday, signalling it does not see the need for major change after the European Central Bank called for more safeguards. Stablecoins - cryptocurrencies pegged to real-world...
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