EU Watchdog Recommends Ban on Multi-Issuance Stablecoins Amid Regulatory Concerns

According to Cointelegraph, a European Union watchdog group has reportedly recommended a ban on multi-issuance stablecoins. The European Systemic Risk Board recently passed a recommendation to prohibit certain stablecoins issued jointly within the EU and other jurisdictions. Although this policy is not legally binding, it could influence authorities to limit the operations of stablecoin issuers such as Circle and Paxos in the region. This development follows European Central Bank President Christine Lagarde's call for policymakers to address regulatory gaps in stablecoins issued by non-EU entities. Additionally, an official from Italy’s central bank highlighted in September the potential risks that multi-issuance stablecoins pose to the EU’s financial stability. The future of the proposed stablecoin ban remains uncertain, as it is unclear whether it will garner the necessary support from authorities and lawmakers to be enacted. Some of the largest stablecoins by market capitalization, like Tether (USDt), are pegged to the US dollar rather than the euro, adding complexity to the regulatory landscape. Meanwhile, EU authorities continue to explore the possibility of introducing a digital euro. Since 2021, officials have been considering a potential rollout of a digital euro through the European Central Bank. ECB executive board member Piero Cipollone recently stated that EU member states might reach an agreement on a digital euro by the end of the year, with a possible launch in 2029. Cipollone emphasized the importance of designing a safe, reliable, and universally accessible form of central bank money for the digital age, suggesting that the digital euro, alongside physical cash, could play a crucial role in maintaining Europe’s financial resilience.