The European Systemic Risk Board (ESRB) said that stablecoins jointly issued inside and outside the EU – often referred to as “multi-issuer” structures – create a dangerous loophole. In these models, one entity within the EU is tightly regulated, while a partner abroad can operate under looser rules. That mismatch, officials argue, could trigger trouble during a redemption surge.
If investors rushed to cash out, the fear is that they would turn to the European arm first, draining local reserves. With protections only covering part of the supply, reserves could prove insufficient, forcing the European Central Bank to step in with emergency measures.
Christine Lagarde, who chairs the ESRB and also leads the ECB, has pressed for consistent global standards. She argues that without harmonization, firms may take advantage of weaker jurisdictions while still exposing the EU to potential liquidity shocks.
Europe already enforces strict requirements under its MiCA regime, mandating that stablecoins be fully backed by reserves. But policymakers warn that unless outside issuers are held to the same rules, the bloc could still import risk from abroad – undermining one of the toughest crypto frameworks in the world.
Source: Reuters
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