Overview

• The European Systemic Risk Board recommended prohibiting stablecoins issued jointly inside and outside the EU, citing built-in vulnerabilities and an urgent need for safeguards.
• ECB leaders, including Christine Lagarde, argue third-country issuers should meet EU standards under an equivalence regime or face prohibition.
• Regulators warn a market shock could drive redemptions toward the EU leg of multi-issuance coins and drain local reserves, heightening liquidity risks.
• Potential restrictions would chiefly affect U.S. dollar issuers such as Circle and Paxos operating linked EU and non-EU entities, though the guidance is not yet law.
• With dollar-pegged tokens holding about 99% of a $230 billion market, the EU is pushing euro alternatives, including a nine-bank stablecoin targeted for 2026 and planning for a possible digital euro by 2029.