The European Commission has taken a softer approach towards stablecoins, contrasting with the stricter warnings issued by the European Central Bank regarding potential risks to the financial system.
European Commission's Response to ECB Warnings
In response to ECB concerns regarding possible bank run risks associated with multi-issuance of stablecoins in Europe and third countries, the European Commission stated that such risks are 'highly unlikely.' A spokesman for the Commission remarked that even in the highly unlikely event of a run on a jointly issued token, redemptions by foreign holders would primarily occur in jurisdictions like the US, where most tokens circulate and a large proportion of reserves are held.
ECB's Stance on Multi-Issuance of Stablecoins
In April, the ECB warned against bank run risks associated with multi-issuance of stablecoins. The bank noted that such a scheme would significantly weaken EU oversight over electronic money token issuers, increasing the likelihood of runs as EU issuers might lack sufficient reserve assets to meet redemption requests from both EU and non-EU token holders.
Industry Optimism Following European Commission's Statements
Juan Ignacio Ibañez, a member of the Technical Committee of the MiCA Crypto Alliance, noted that the Commission's approach to joint stablecoin issuance indicates that authorities will not require issuers like Circle to functionally distinguish between USDC-US and USDC-EU. 'This is very positive news and even a relief,' said Ibañez. He emphasized the importance of cross-border usability for stablecoins, a fundamental feature that could be undermined by jurisdictional silos.
Thus, the European Commission's softened stance on stablecoins could promote further development in this segment across Europe while maintaining control over potential risks to the financial system.
