EU eyes ban on multi-region stablecoin issuance after volatility
The European Systemic Risk Board recommended a ban on issuing the same tokens across multiple jurisdictions, raising regulatory pressure on cross-border crypto firms.
The board, which monitors Europe's financial stability, advised restricting "multi-issuance" tokens to prevent systemic risk from cross-border contagion. The proposal targets providers that issue tokens both within the EU and from outside regions.
The recommendation would force operators like Circle and Paxos to limit or reconfigure their issuance structures. The European Central Bank has backed tighter controls in recent months.
The board argues that tokens issued across multiple jurisdictions could transmit shocks from weaker regulatory regimes into Europe. Under the proposed ban, operators would need to separate issuance and operations by jurisdiction, increasing compliance costs.
The restriction seeks to protect the EU financial system from vulnerabilities tied to global crypto issuance networks. If adopted by EU lawmakers, the ban could reshape the cross-border landscape, compelling firms to localize issuance or withdraw services in certain regions.
The board argues that tokens issued across multiple jurisdictions could transmit shocks from weaker regulatory regimes into Europe. Under the proposed ban, operators would need to separate issuance and operations by jurisdiction, increasing compliance costs.
The restriction seeks to protect the EU financial system from vulnerabilities tied to global crypto issuance networks. If adopted by EU lawmakers, the ban could reshape the cross-border landscape, compelling firms to localize issuance or withdraw services in certain regions.
The proposal aligns with broader EU efforts to regulate digital assets, including the Markets in Crypto-Assets regulation. While MiCA covers many crypto instruments, this targeted recommendation would add new restrictions specifically for multi-jurisdiction issuance.
Circle issues USDC tokens in multiple jurisdictions including the United States and European countries. Paxos operates similar multi-jurisdiction token issuance for its dollar-pegged tokens. Both companies would face significant operational changes under the proposed rules.
The European Systemic Risk Board monitors risks to the EU financial system and makes recommendations to regulators and policymakers. Its proposals require adoption by EU institutions before becoming binding rules.
The board has not specified timelines for when the recommendation might be considered by EU lawmakers. Implementation would require legislative action through European Parliament and Council approval processes.
No representatives from affected companies provided comments on the proposal. The recommendation comes as European regulators increase scrutiny of digital asset markets following volatility in crypto markets during 2024.
The proposed ban would apply to tokens pegged to fiat currencies and would affect major issuers serving European customers. Smaller regional issuers operating within single jurisdictions would not face the same restrictions.
Circle issues USDC tokens in multiple jurisdictions including the United States and European countries. Paxos operates similar multi-jurisdiction token issuance for its dollar-pegged tokens. Both companies would face significant operational changes under the proposed rules.
The European Systemic Risk Board monitors risks to the EU financial system and makes recommendations to regulators and policymakers. Its proposals require adoption by EU institutions before becoming binding rules.
The board has not specified timelines for when the recommendation might be considered by EU lawmakers. Implementation would require legislative action through European Parliament and Council approval processes.
No representatives from affected companies provided comments on the proposal. The recommendation comes as European regulators increase scrutiny of digital asset markets following volatility in crypto markets during 2024.
The proposed ban would apply to tokens pegged to fiat currencies and would affect major issuers serving European customers. Smaller regional issuers operating within single jurisdictions would not face the same restrictions.
Author
Sebile Fane cut her teeth in blockchain by building tiny NFT experiments with friends in her living room, long before the buzzwords took hold. She’s driven by a curiosity for the human stories behind smart contracts — whether it’s a small-town artist minting her first token or a DAO voting on climate grants — and weaves technical insight with genuine empathy.
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