Catenaa, Sunday, September 07, 2025- European Central Bank President Christine Lagarde has urged the European Union to impose stricter oversight on non-EU stablecoin issuers, warning of vulnerabilities in the bloc’s crypto regulations.
Speaking at the European Systemic Risk Board’s annual conference, Lagarde said the EU’s Markets in Crypto-Assets (MiCA) framework leaves gaps, especially in cases where EU and non-EU entities jointly issue fungible stablecoins. She argued that without equivalent safeguards abroad, investors could exploit regulatory loopholes.
MiCA requires stablecoin issuers in the EU to hold significant bank reserves and guarantee redemptions at par value without fees.
Lagarde cautioned that in joint issuance schemes, investors facing stress would likely redeem through EU channels, placing disproportionate strain on European reserves.
She called for legislation to prevent such operations in the EU unless foreign regimes meet comparable standards, warning that otherwise regulatory arbitrage could undermine financial stability.
Lagarde also underscored the need for international coordination to close gaps that could be exploited globally.
Her remarks come as US policymakers under President Donald Trump adopt a more permissive stance toward stablecoins.
The Federal Reserve recently withdrew guidance discouraging banks from engaging in stablecoin activities, coinciding with a rapid expansion of dollar-pegged tokens.
According to The Block’s data, the supply of US dollar-linked stablecoins grew to $271.3 billion as of Sept. 3, up from $256.3 billion in early August.
