EU Risk Watchdog Calls for Urgent Safeguards over Multi-Issuer Stablecoins

EU Risk Watchdog Calls for Urgent Safeguards over Multi-Issuer Stablecoins

The European Systemic Risk Board (ESRB), chaired by the President of the European Central Bank, issued a warning about financial vulnerabilities posed by multi-issuer stablecoins—tokens issued partly inside the EU and partly outside, under differing rules.
The fear is that during times of market stress, investors may rush to redeem tokens backed by EU regulators, leaving non-EU-backed portions under severe liquidity strain.
ESRB urges consistent oversight and harmonized regulation to prevent regulatory arbitrage and to ensure the stability of the financial system in cross-border digital-asset situations.
This could lead to more stringent rules on reserve backing, issuer structure, disclosures, and cross-border redemption procedures.
As stablecoins continue to grow in usage and size, the ESRB’s call signals that regulators see them not just as crypto innovations, but as potential weak points in the broader monetary system if inadequately managed.