Despite opposition from the European Central Bank (ECB), the European Union (EU) is planning to allow foreign stablecoins, backed by the dollar, to easily penetrate the European market. According to a new report from Moody's, this change is largely due to the passage of stablecoin legislation in the United States.
The change in EU policy
The European Commission, the executive body of the EU, is expected to soon issue official guidance that stablecoins issued in other jurisdictions around the world should be considered interchangeable with branded versions specifically designed for the European market. This contradicts the ECB's previous stance, which was adamantly against the role of foreign stablecoins (especially USD-backed stablecoins) in the European market. According to the EU's new digital asset regulations, stablecoin issuers operating within the bloc must keep the majority of the reserves of that currency in a European bank.
Pressure from U.S. stablecoin legislation
Cristiano Ventricelli, a senior analyst at Moody's, stated that the passage of the GENIUS Act in the U.S. Senate – a bill that would establish a legal framework for the issuance and trading of stablecoins in the United States – has put pressure on foreign markets to better integrate top stablecoins, even if those tokens are backed by non-Euro currencies and their reserves are held abroad.
If the EU modifies the rules on stablecoins, this could signal the bloc's desire not to fall behind as other powers race to pass cryptocurrency legal frameworks and establish an integrated global cryptocurrency economy. The U.S. passing stablecoin legislation could have significant impacts on other jurisdictions around the world, including Asia, the Middle East, and the United Kingdom.