European Commission: Existing cryptocurrency rules already address stablecoin risks

The European Commission said on Friday that European cryptocurrency rules are sufficient to address stablecoin risks, and after the European Central Bank called for more safeguards, it believes that no major adjustments are needed. Europe has already introduced landmark cryptocurrency-specific regulations, but Brussels lawmakers are under pressure from the European Central Bank to block the "multi-location" stablecoin model.

At issue is whether multinational stablecoin companies can treat tokens issued within the EU as fungible with tokens held outside the bloc. On Tuesday, six cryptocurrency industry associations, including Circle, wrote to the European Commission, calling for guidance to confirm the multi-issuance model and clarify how it operates under the Markets in Crypto-Assets Directive (MiCA). A European Commission spokesperson stated that MiCA provides a robust and proportionate framework for addressing stablecoin risks and that clarification is being provided as soon as possible. The European Systemic Risk Board (ESRB) stated that the multi-issuance structure carries inherent risks, while the European Central Bank expressed concern about triggering a run on its reserves. Stablecoin issuers, however, stated that they have sufficient reserves to handle redemptions. (Reuters)