ECB wants stricter rules for stablecoins issued outside the EU

• Christine Lagarde calls for equal oversight for stablecoin issuers
• MiCA presents gaps in joint issuance schemes
• Dollar-pegged stablecoins reach $271,3 billion

European Central Bank (ECB) President Christine Lagarde has advocated for the European Union to impose the same reserve requirements on stablecoin issuers outside the bloc as those based in the region. She said the measure is essential to mitigate the risk of bank runs and avoid regulatory loopholes.

During the annual conference of the European Systemic Risk Board, Lagarde highlighted that “There are still gaps” in the Markets in Cryptoassets (MiCA) legislation, in force since the end of 2024. The regulation establishes comprehensive rules for cryptoassets, including the requirement for substantial reserves in bank deposits and redemption at the nominal value guaranteed to EU investors.

However, the leader emphasized that vulnerabilities persist in joint issuance schemes, in which EU and non-EU entities issue fungible stablecoins in a combined manner. In these arrangements, MiCA requirements apply only to the European issuer, creating room for regulatory arbitrage.

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

The ECB leader suggested that European legislation prevent such operating models unless there are robust equivalence mechanisms in other jurisdictions and adequate safeguards for asset transfers between EU and non-EU entities. "This also highlights why international cooperation is indispensable," she added. "Without a global level playing field, risks will always seek the path of least resistance."

Lagarde's speech comes as the US adopts a more favorable policy toward cryptocurrencies under President Donald Trump. In April, the Federal Reserve withdrew guidelines that discouraged banks from dealing with cryptocurrencies and stablecoins.

With this more flexible regulatory environment, the supply of dollar-backed stablecoins grew from $256,3 billion in early August to $271,3 billion on September 3, reinforcing the weight of these assets in the global market.