EU's Current Crypto Regulations Deemed Sufficient Amid Stablecoin Concerns

According to PANews, despite warnings from the European Central Bank (ECB) and the European Systemic Risk Board (ESRB) about the potential threats stablecoins pose to financial stability, the European Banking Authority (EBA) believes that the European Union's existing cryptocurrency regulations are adequate to address these risks. An EBA spokesperson acknowledged the risk of 'potential large-scale redemption requests' but emphasized that the level of risk largely depends on the operational model and business scale of the stablecoin issuers. Currently, the ECB and ESRB have urged Brussels to impose stricter restrictions on the operations of stablecoin companies within and outside the EU, particularly advocating against the 'multi-location issuance' model. This model, used by global stablecoin companies like those behind USDC or USDT, involves mixing tokens issued within the EU with those circulated in other regions. The ESRB warns that if investors outside the EU suddenly redeem tokens issued within the EU, it could lead to significant financial losses and a liquidity crisis. Officials have expressed concerns to Reuters that if many investors withdraw simultaneously, the United States might block dollar reserves from flowing to Europe, complicating the ability of stablecoin issuers to fulfill redemption payments.