The European Central Bank, supported by the European Systemic Risk Board, is seeking to impose a blanket ban on so-called multi-issue stablecoins within the European Union.
This move, which represents an escalation in the battle between monetary authorities and private cryptocurrencies, targets models such as those used by Circle and Paxos, which allow for the simultaneous issuance of tokens both within and outside the EU.
This trend stems from European regulators’ explicit fear that these currencies could deplete the EU’s foreign exchange reserves in the event of a crisis, potentially destabilizing its financial system.
This strong demand reflects growing concern about the dominance of the dollar in the crypto space, as US-backed tokens account for 99% of the global stablecoin market, estimated at $230 billion, while euro-backed tokens represent only 0.15%.
Officials fear that the widespread use of dollar-denominated stablecoins could undermine European financial sovereignty and the central bank’s ability to implement monetary policy.
European Central Bank President Christine Lagarde warned that the current framework leaves the region vulnerable to risks similar to the cross-border banking crises Europe has experienced in the past, calling on lawmakers to tighten MiCA regulations to address joint issuance loopholes.
In parallel with this regulatory tightening, the European Central Bank is accelerating its efforts to launch a digital euro, targeting its launch in 2029, to provide a public digital alternative denominated in euros.
Separately, a consortium of nine major European banks, including ING and UniCredit, plans to launch its own euro-backed stablecoin in 2026 under the supervision of the MiCA.
This competition between the ECB’s digital currency and private banking projects reveals a new phase in the reshaping of the continent’s payments landscape, with the central bank also pledging to preserve physical cash as part of a dual payment system that ensures continued choice for consumers.
