European Central Bank (ECB) President Christine Lagarde stated that the EU should strengthen regulations on "stablecoin issuers outside the EU" and require them to comply with the same strict reserve requirements as those within the EU, in order to prevent potential "run risks."
Christine Lagarde pointed out at the annual meeting of the European Systemic Risk Board (ESRB) on Wednesday that although the EU has already laid the regulatory framework through the Markets in Crypto-Assets Regulation (MiCA), there are still "gaps" in the specific requirements for stablecoin issuers.
According to MiCA requirements, stablecoin issuers within the EU must hold a substantial amount of bank deposits as reserves, and ensure that EU investors can redeem assets at par at any time.
However, Lagarde warned that vulnerabilities still exist under the framework of 'cross-border multi-entity co-issuance'. In this model, the same type of interchangeable stablecoin is issued simultaneously by both EU and non-EU institutions, but MiCA can only constrain part of the EU territory, effectively leaving room for regulatory arbitrage.
‘Once a run occurs, investors will naturally choose to redeem in the jurisdiction with the strictest safeguards, which is likely to be the EU. Moreover, MiCA prohibits charging redemption fees,’ Lagarde pointed out, highlighting that the issue lies in the scale of reserves within the EU system, which may not be able to withstand such concentrated demand.
She urged EU legislators to establish stricter regulations to prevent such cross-border structures from entering the EU market unless the relevant non-EU jurisdictions can establish sound equivalent regulatory mechanisms and set clear protective measures for cross-border asset transfers.
Data shows that as of September 3, the total issuance of US dollar stablecoins has reached 271.3 billion dollars, continuing to grow from 256.3 billion dollars at the beginning of August.
"European Central Bank President urges: Strengthen regulation of 'non-EU stablecoin issuers'" This article was first published on (Block客).
