TLDR
- ECB’s Lagarde calls for tighter controls on non-EU stablecoin issuers to mitigate risks.
- MiCA’s current rules may create regulatory arbitrage, allowing non-EU issuers to bypass safeguards.
- U.S. stablecoin market sees rapid growth, with over $270 billion in U.S. dollar-pegged stablecoins.
- China considers issuing a yuan-backed stablecoin, potentially escalating global competition.
Christine Lagarde, the president of the European Central Bank (ECB), has called for stricter regulations for non-EU stablecoin issuers operating in the European Union. During her speech at the ninth annual European Systemic Risk Board (ESRB) conference on Wednesday, Lagarde emphasized that gaps remain in the EU’s Markets in Crypto-Assets (MiCA) regulation, particularly concerning multi-issuer stablecoins and potential risks from non-EU entities.
Addressing Gaps in MiCA Regulations
The European Central Bank has voiced concerns over the lack of clear guidelines for stablecoin issuers operating between the EU and other countries. While MiCA regulations require stablecoin issuers to maintain robust reserves and provide redemption rights at par value for investors, these requirements are only applicable to EU-based entities.
This creates room for regulatory arbitrage when non-EU issuers collaborate with EU counterparts, raising the risk of imbalances in stablecoin operations.
Lagarde noted that in the event of a market crisis or “run,” investors would likely seek to redeem their holdings in the EU, where MiCA ensures robust protections, including the prohibition of redemption fees. However, she pointed out that reserves held within the EU may not be enough to handle the concentrated demand that could arise during a crisis. This scenario underscores the vulnerability of the system and highlights the need for further regulation.
Equivalence and Global Cooperation
Lagarde emphasized the importance of equivalence regimes, where non-EU stablecoin issuers should be held to the same standards as those operating within the EU.
She suggested that any stablecoin issuers operating in the EU, particularly those involved in cross-border or multi-issuer arrangements, should be subject to stringent regulations in their home jurisdictions.
“Without international cooperation and a level global playing field, risks will always seek the path of least resistance,” Lagarde added. This statement underscores her belief that global collaboration is key to mitigating risks associated with stablecoins and ensuring their safe operation within the EU and beyond.
Impact of U.S. Stablecoin Laws
Lagarde’s comments come at a time when the U.S. has taken significant steps toward solidifying its position as a major player in the global stablecoin market. The U.S. government recently passed laws that will create a clearer framework for stablecoin issuers, which could potentially drive more stablecoin activity into the country.
The U.S. stablecoin market is already seeing substantial growth, with U.S. dollar-pegged stablecoins, such as USDT and USDC, continuing to dominate the global market.
According to recent data, the total supply of U.S. dollar-pegged stablecoins has increased from $256.3 billion in August to $271.3 billion in September 2025. As the U.S. moves forward with more crypto-friendly policies, the U.S. dollar is expected to strengthen its position in cross-border payments, which could also influence the European market.
China’s Possible Stablecoin Push
As the U.S. and Europe grapple with their own stablecoin regulations, China is also reportedly exploring the possibility of issuing a state-backed stablecoin pegged to the renminbi.
This move could be a response to the growing influence of the U.S. dollar in the global crypto market, especially as stablecoins play an increasing role in global cross-border payments.
While no official announcement has been made, the prospect of China launching its own stablecoin could introduce a new level of competition among global powers in the stablecoin space. Should this move materialize, it could add more pressure on both the U.S. and EU to adjust their stablecoin regulations and maintain a competitive edge.
