Europe’s top banking authority said on Wednesday that the bloc’s existing crypto regulatory framework already contains safeguards strong enough to manage the financial stability risks posed by stablecoins. The European Banking Authority (EBA) argued that its rules under the Markets in Crypto-Assets Regulation, or MiCA, provide the necessary structure to ensure redemption safety and liquidity control. The statement followed warnings from the European Central Bank (ECB) and the European Systemic Risk Board (ESRB) that the so-called “multi-issuance” model used by global stablecoin firms could amplify redemption runs within the eurozone if non-EU holders rushed to cash out EU-issued tokens. The EBA’s remarks highlight an ongoing policy debate in Brussels over how tightly to regulate stablecoin circulation across jurisdictions as demand for dollar-pegged digital assets continues to rise.
A spokesperson for the EBA said the risks identified by the ESRB were inherent to large-scale redemption dynamics but emphasized that their impact would vary based on a stablecoin’s design and operational scale. “Based on these elements, necessary safeguards following MiCA should be put in place to mitigate the risk,” the official said. The EBA confirmed that it is still awaiting clarification from the European Commission on whether multi-issuance models fall within MiCA’s scope. Stablecoin issuers such as Tether and Circle maintain dollar-based reserves to back their tokens, but European regulators are pushing for tighter oversight of how those reserves are held and redeemed across markets. Luis del Olmo, a senior expert at the EBA, said issuers must maintain sufficient liquidity to meet redemption requests globally, reinforcing that stablecoins should operate under the same prudential expectations as traditional financial instruments.
While stablecoins represent a relatively small fraction of Europe’s financial system, their expansion has accelerated sharply over the past year. Market data show that stablecoins tied to the U.S. dollar account for the vast majority of global issuance, raising concerns among European policymakers about dependency on non-EU reserve assets. Tether, based in El Salvador, remains the dominant global player, while Circle’s USDC has emerged as the largest EU-regulated stablecoin operating under a multi-issuance structure with $75 billion in circulation. Under MiCA, national regulators will continue to oversee licensed entities, but the EBA will directly supervise those deemed “significant” in scale or systemic importance. People familiar with regulatory discussions in two EU member states told Reuters that they shared the ECB’s concern about the potential for capital flow disruption, noting that U.S. restrictions on reserve transfers could complicate redemptions for European investors.
The EBA’s confidence in MiCA reflects the broader effort to integrate digital asset regulation within existing financial supervision frameworks. Analysts say that as stablecoin markets mature, regulatory clarity will be critical to maintaining both investor confidence and financial stability.
