Market News

EU Central Bank Calls for Unified Stablecoin Regulations Amid Financial Risks

Italy's central bank deputy governor, Chiara Scotti, has urged the European Union to implement clear regulations for cross-border stablecoins.

At a recent central banking conference in Rome, she highlighted the potential legal and financial-stability risks stemming from unclear rules.

Scotti emphasized that stablecoins issued outside the EU, which can be redeemed within the bloc, require specific guidance to protect users and markets.

As stablecoins are classified in the EU as electronic money tokens (EMTs), the regulatory landscape remains complex.

Discrepancies between the European Commission and the European Central Bank (ECB) pose challenges, particularly regarding multi-country issuance models.

While the Commission believes current EU regulations could facilitate cross-border stablecoin use, the ECB warns of potential threats to financial stability if these tokens lack proper backing.

Scotti pointed out that redemption requests from outside the EU could strain liquidity for issuers, creating operational challenges.

She advocated for timely legislation or standardized frameworks to prevent systemic weaknesses in the market.

This ongoing debate underscores the EU's struggle to balance innovation with necessary safeguards in the rapidly evolving crypto landscape.

As the EU advances the Markets in Crypto-Assets (MiCA) regulation, the treatment of cross-border stablecoins remains a critical issue that policymakers and industry stakeholders are eager to resolve.