Catenaa, Friday, October 03, 2025- The European Central Bank has secured backing for a sweeping ban on multi-issuance stablecoins in the European Union, a move that could disrupt major issuers such as Circle and Paxos, reports said early this week.
Multi-issuance stablecoins are tokens jointly issued inside and outside the EU but treated as interchangeable. Regulators warn that in a market downturn, investors could redeem EU-based tokens en masse, straining local reserves and exposing the bloc to overseas liabilities.
ECB President Christine Lagarde, chairing the European Systemic Risk Board, has repeatedly cited gaps in the EU’s Markets in Crypto-Assets Regulation as creating systemic risk.
She said that unless strong oversight for cross-border issuance is established, these multi-issuance schemes will not be permitted to operate in the EU. Euro-backed tokens represent just 0.15% of the $230 billion global stablecoin market, with USD-pegged assets dominating.
Circle and Paxos, both headquartered in the US, could be most affected. Their EU reserves are largely invested in US dollars and short-term government securities.
The European Commission has not yet taken an official stance, with divisions remaining between EU institutions. Bank of Spain board member Judith Arnal noted that disagreements between the ECB, the Commission, and European Parliament could undermine MiCA’s credibility.
The policy shift coincides with Europe’s digital euro project, planned for a 2029 launch, while nine banks, including ING, UniCredit, and SEB, aim to issue a euro-backed stablecoin in 2026.
The initiative will operate under the MiCA framework and seek e-money licensing in the Netherlands, supporting cross-border payments while strengthening Europe’s financial sovereignty.
