European Commission Pushes Stablecoin Regulation Despite Warnings

Quick overview

The European Commission is preparing to unveil new rules for stablecoins, brushing aside concerns raised by the European Central Bank (ECB).

The European Commission (EC) is moving forward with its plans to regulate stablecoins, despite warnings from officials at the European Central Bank, who argue that the upcoming rules could pose risks to the region’s banking sector during periods of market turbulence.

In recent hours, the European Union has taken further steps toward finalizing its regulatory framework for stablecoins and is expected to announce the new standards in the coming days, according to the Financial Times—in defiance of objections from the ECB.

Officials within the eurozone’s governing institutions caution that the proposed regulations could contribute to financial instability during times of volatility.

Nevertheless, the Commission is expected to declare that stablecoins issued outside the EU will be allowed to trade with those permitted exclusively within EU markets.

This development comes as some Brussels lawmakers and top ECB officials weigh the creation of a so-called “digital euro,” partly in response to U.S. President Donald Trump’s push to promote stablecoins.

Lagarde Backs Digital Euro in Response to Stablecoins

ECB President Christine Lagarde stated on Monday that a future digital euro would enhance Europe’s financial sovereignty. In contrast, she warned that stablecoins could increase risks to both economic policy and financial stability by pulling deposits away from regional banks.

Lagarde also pointed out that, despite typically being pegged 1:1 to the U.S. dollar, stablecoins don’t always maintain a fixed value—undermining their perceived stability on paper.

Meanwhile, in the United States, the Senate recently passed legislation establishing a regulatory framework for overseeing stablecoins. The law requires that tokens be backed by liquid assets—such as U.S. dollars or Treasury bonds—and that issuers provide monthly disclosures detailing the composition of their reserves.

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Ignacio Teson

Economist and Financial Analyst

Ignacio Teson is an Economist and Financial Analyst. He has more than 7 years of experience in emerging markets. He worked as an analyst and market operator at brokerage firms in Argentina and Spain.

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