By 
European Central Bank (ECB) President Christine Lagarde has called on European Union legislators to impose strict safeguards and equivalence regimes on foreign issuers of stablecoins, warning of potential risks to the bloc’s financial stability.
Speaking at a regulatory conference on Wednesday, Lagarde emphasized that without consistent standards, the EU could face destabilizing “runs” on reserves held within its jurisdiction.
The EU already enforces one of the world’s most stringent regulatory frameworks for digital assets under the Markets in Crypto-Assets Regulation (MiCAR), which mandates that stablecoins—digital tokens pegged to official currencies—must be fully backed by reserves.
Lagarde, however, stressed that issuers outside the bloc must also be held to the same standards if they wish to operate in Europe. “European legislation should ensure that such schemes cannot operate in the EU unless supported by robust equivalence regimes in other jurisdictions and safeguards relating to the transfer of assets between the EU and non-EU entities,” she said.
She further highlighted the need for stronger global alignment, warning that regulatory gaps could push risks toward weaker jurisdictions. “Without a level global playing field, risks will always seek the path of least resistance,” Lagarde added.
A key concern, she noted, is that MiCAR allows stablecoin holders to redeem their assets both inside and outside the EU. In times of stress, investors would likely prefer to redeem within the EU, given its stronger protections and prohibition of redemption fees. This could trigger a sudden surge in demand on EU-based reserves, potentially leaving them insufficient to cover withdrawals during a liquidity crunch.
The ECB, which serves as both the chief regulator of eurozone banks and guardian of financial stability across the bloc, has been vocal about the systemic risks posed by unregulated or unevenly regulated crypto assets. Lagarde’s comments reinforce calls for tighter oversight of foreign stablecoin issuers and deeper international regulatory cooperation.
Comments