EU Watchdog Sparks Outrage With Call to Ban Stablecoins

The European Union’s financial watchdog has called for a controversial ban on multi-issuance stablecoins, raising alarm across the crypto industry. According to a Bloomberg report, the European Systemic Risk Board (ESRB) passed a recommendation last week urging regulators to restrict stablecoins issued jointly within the EU and abroad. While not legally binding, the move could add pressure on authorities to tighten oversight of major issuers such as Circle and Paxos, both of which operate in European markets.

The push comes just weeks after European Central Bank (ECB) President Christine Lagarde urged lawmakers to close gaps in crypto regulation, warning of risks tied to non-EU stablecoins. Italy’s central bank echoed these concerns in September, saying multi-issuance stablecoins could threaten the EU’s financial stability. Critics fear that if enforced, such a policy could disrupt Europe’s digital finance sector and stifle innovation.

Whether this recommendation gains traction among EU policymakers remains unclear. Stablecoins like Tether’s USDT and Circle’s USDC, which dominate the market, are pegged to the US dollar rather than the euro, highlighting the region’s reliance on foreign-backed digital assets.

At the same time, EU leaders are pushing forward with plans for a digital euro. Since 2021, the ECB has been studying the possibility of issuing a central bank digital currency. Executive board member Piero Cipollone recently said member states could reach an agreement “by the end of the year,” with a potential rollout by 2029. He described the project as a cornerstone for Europe’s financial sovereignty, saying a digital euro, combined with physical cash, could strengthen resilience in the digital age.

The clash between banning stablecoins and introducing a state-backed digital euro underscores Europe’s high-stakes battle over the future of money.