A European Union financial oversight body has recommended restricting stablecoins issued jointly between EU and non-EU jurisdictions, according to a report from Bloomberg.
The European Systemic Risk Board approved the policy guidance last week, though the recommendation carries no direct legal authority. The move could nonetheless influence national regulators to constrain operations of firms like Circle and Paxos.
ECB President Christine Lagarde recently urged policymakers to close regulatory gaps surrounding stablecoins from non-EU issuers. An Italian central bank official similarly highlighted concerns about financial stability risks in September.
Major stablecoins, including USDT, maintain dollar pegs rather than euro denominations. Whether lawmakers and enforcement agencies will adopt the watchdog's recommendation remains uncertain at this stage.
The proposal emerges as EU officials continue to develop a digital euro, with ECB executive board member Piero Cipollone suggesting member states could finalize agreements by year-end. Central bank exploration of a digital currency dates back to 2021.
Cipollone indicated during recent remarks that a launch could materialize by 2029. He described the initiative as creating reliable central bank money suited for modern digital commerce.
The executive board member emphasized that a digital euro would complement physical cash while strengthening European economic resilience. Officials position the project as essential infrastructure for evolving payment systems.
The stablecoin restriction recommendation represents one element of broader cryptocurrency regulatory discussions across the EU. How authorities balance innovation with financial stability concerns will shape the region's approach to digital assets.