NYDFS and EBA sign memorandum to monitor stablecoins
New York and European regulators agreed to share supervisory and confidential data on the $314 billion stablecoin market to flag stress and coordinate responses.
On Tuesday, the New York Department of Financial Services and the European Banking Authority signed a 22-page memorandum of understanding to exchange supervisory and confidential information on the $314 billion stablecoin market. The agreement commits them to flag market stress quickly and to share information relevant to civil or criminal investigations. The memorandum is not legally binding.
The text sets procedures for timely sharing of data on supervised entities and for coordinating responses when firms face ‘serious operational or financial difficulties.’ In emergencies, the two agencies will attempt rapid notification to avoid being caught off guard by problems originating across the Atlantic. Each regulator will continue to take action under its own national laws and supervisory powers.
Under the memorandum, regulators will exchange confidential supervisory information where appropriate and maintain confidentiality protocols. Requests for information on civil or criminal probes will be considered, subject to legal constraints and the limits of the agreement.
Stablecoins are designed to keep a fixed value but can lose their peg and move large amounts of capital across borders. Regulators cited the 2023 episode when Circle’s USDC briefly traded near 87 cents after the firm disclosed exposure to the collapse of Silicon Valley Bank as an example of market stress.
NYDFS Acting Superintendent Kaitlin Asrow described international coordination as ‘essential for the digital asset space.’ European Central Bank board member Isabel Schnabel warned stablecoins are ‘subject to the risk of runs’ and noted that most stablecoins are denominated in dollars. Bank of England deputy governor Sarah Breeden said the Bank is reconsidering parts of its proposed stablecoin rules and will ‘look hard’ at alternative ways to contain liquidity stress.
The NYDFS noted the pact applies to actions it can take with firms under its supervision and highlighted its record of strict oversight. The memorandum reflects how stablecoins move capital across jurisdictions and how regulators are seeking faster information flows to respond to cross-border risks.
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