EU Watchdog Calls for Ban on Multi-Issuer Stablecoins, Report Says

A major European Union (EU) watchdog has reportedly recommended a ban on multi-issuance stablecoins, warning that such tokens could threaten the region’s financial stability. The proposal adds pressure on companies like Circle and Paxos, which operate across multiple jurisdictions.

• The move could impact issuers like Circle (USDC) and Paxos that operate inside and outside the EU.
• The recommendation follows recent comments from ECB President Christine Lagarde on crypto regulation.
• The proposal is not legally binding but could influence EU policymakers.
• EU authorities continue to explore launching a digital euro by 2029.

According to a Bloomberg report, the European Systemic Risk Board (ESRB) — an EU body responsible for monitoring financial stability — has recommended a ban on multi-issuance stablecoins. These are tokens issued by companies operating both in the EU and in non-EU jurisdictions.

Although the ESRB’s recommendation is not legally binding, it could encourage European regulators to restrict stablecoin activity across borders. If adopted, the policy could affect major issuers like Circle, the company behind USDC and EURC, and Paxos, which both offer services within Europe.

The report comes just weeks after European Central Bank (ECB) President Christine Lagarde urged lawmakers to tighten crypto regulations, pointing out possible regulatory gaps for non-EU stablecoins. Similarly, an official from Italy’s central bank warned that multi-issuance stablecoins could pose legal, liquidity, and operational risks to the EU’s financial system.

At this stage, it remains unclear whether the ESRB’s proposed ban will gain traction among European lawmakers. The group’s recommendation is seen as part of a broader debate over how to balance innovation and financial safety in Europe’s fast-growing digital asset sector.

Many of the largest stablecoins by market capitalization, such as Tether (USDT), are pegged to the U.S. dollar, not the euro. This dominance of dollar-based tokens has sparked concerns among European regulators about foreign currency dependence in the region’s crypto markets.

Meanwhile, the European Union continues exploring a digital euro, a potential central bank digital currency (CBDC) that would serve as a regulated alternative to private stablecoins. ECB Executive Board member Piero Cipollone recently said member states could reach an agreement “by the end of the year,” with a possible rollout as early as 2029.

“We are designing a safe, reliable, and universally accessible form of central bank money for the digital age,” Cipollone said, adding that a digital euro could help preserve Europe’s financial resilience alongside traditional cash.

Final Thought

The ESRB’s recommendation marks another step in Europe’s cautious approach to digital assets. While not yet law, a potential ban on multi-issuer stablecoins could reshape how companies like Circle and Paxos operate within the region. At the same time, the digital euro initiative shows the EU’s intent to create its own secure, regulated alternative in the evolving global crypto economy.