ECB Blocks Key Stablecoin Proposal
The European Central Bank blocked a proposal by the Brussels-based economic institute Bruegel during an informal ECOFIN meeting in Nicosia, Cyprus.
Summary:
- The ECB refused to ease the rules for euro-denominated stablecoins.
- MiCAR puts European companies at a competitive disadvantage.
- Europe risks slowing down progress in the sector.
The proposal aimed to relax some of the strict MiCAR requirements for euro stablecoins and allow regulated issuers to gain access to ECB funding facilities.
The Data Shows How Far Europe Is Already Falling Behind
The real issue becomes clearest when looking at the sector data.
European users generate 38% of all stablecoin transactions globally, yet euro-denominated products still account for only 0.3% of the global market. This effectively shows how heavily Europe already relies on dollar-based stablecoins, despite regulators’ efforts to build a European regulatory framework around the sector.
As a result, the dominance of dollar-based products in Europe is not a future risk – it is a process already underway. A telling example is Circle’s EURC, the largest euro stablecoin, which currently ranks only 12th globally by market size.
Against this backdrop, the ECB’s decision to block the proposal effectively signals that Europe is not yet prepared to loosen the rules in order to reduce its lag in the sector.
What Bruegel Actually Proposed
Economists Lucrezia Reichlin, Bo Sangers, and Jeromin Zettelmeyer proposed two major changes intended to make Europe more competitive in the sector.
The first was easing MiCAR’s strict liquidity requirements, while the second was allowing regulated stablecoin issuers access to ECB funding.
According to Bruegel, the current rules are gradually pushing digital financial activity outside the EU and making European users increasingly dependent on dollar-based infrastructure, while the United States is actively developing its regulatory framework — an approach Europe needs if it wants to stop falling behind.
Why the ECB Said “No”
The ECB justified its refusal with several key concerns: the risk of bank deposit outflows, reduced lending activity, complications for monetary policy, and potential abuse of emergency liquidity mechanisms.
But the real issue may be something else.
The ECB’s primary priority appears to remain the protection of the current banking model, through which the central bank maintains control over lending and monetary policy.
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The most revealing issue in this case is the dispute over access to ECB funding. The central bank described stablecoin issuers as “unregulated technology companies,” even though Bruegel’s proposal applied exclusively to MiCAR-regulated entities.
This suggests that the problem may not be regulation alone, but also reluctance to allow private companies to play a larger role in digital payments outside the traditional banking system.
Christine Lagarde reinforced this position by stating that the arguments in favor of euro stablecoins are “much weaker than they appear.”
Instead, the ECB continues to support so-called tokenized bank deposits.
The Major Problem With MiCAR
MiCAR is the European regulatory framework for crypto-assets that defines the rules for stablecoins, reserves, licensing, and market supervision within the European Union. According to many companies, the way MiCAR is structured is already becoming one of the biggest problems for Europe’s crypto sector.
The regulation requires stablecoin issuers to hold 60% of reserves in cash – a condition that places European companies at a significant disadvantage compared to their American competitors.
While American firms can generate yield from government bonds and use that revenue to expand, European issuers remain constrained by strict cash reserve requirements.
Tokenized Deposits Do Not Solve the Problem
The ECB views tokenized bank deposits as a safer alternative to stablecoins.
In practice, these are digital versions of traditional bank deposits built on blockchain technology.
However, according to analysts, this model does not solve the core issue that led users to adopt dollar stablecoins in the first place.
Tokenized deposits remain tightly tied to specific banks, regulations, operating hours, and the limitations of the traditional financial system.
As a result, they struggle to offer the same flexibility and global accessibility that dollar stablecoins already provide for international payments and DeFi applications.
Europe Risks Falling Even Further Behind
The European Commission is already reviewing MiCAR, and future changes to reserve requirements are not ruled out.
These decisions will determine whether Europe can at least partially reduce the gap with the United States.
If the current framework remains largely unchanged and the ECB’s stance becomes even stricter, European users will likely continue relying heavily on dollar-based infrastructure.
In that case, regulation designed to protect Europe’s financial system could unintentionally deepen Europe’s dependence on dollar stablecoins.
The information presented in this article is intended for informational purposes only and should not be interpreted as financial, investment, or trading advice. Coinspress.com does not promote or advocate for any particular investment strategy, asset, or cryptocurrency project. Cryptocurrency markets are highly volatile and unpredictable – always perform your own research and seek guidance from a qualified financial professional before making any investment decisions.
Kosta Gushterov
Reporter at CoinsPress
Kosta has reported on cryptocurrency markets and blockchain infrastructure since 2020, bringing over six years of hands-on experience in the crypto industry built through daily tracking of markets, trends, and emerging blockchain developments. Specializing in Bitcoin on-chain analysis, institutional ETF flows, and digital asset price action, his work has been cited by other news agencies and consistently covers market developments with a focus on data-driven reporting across Bitcoin, Ethereum, Solana, and XRP. Over the years, Kosta has contributed to multiple crypto media outlets in different regions, authoring over 6,000 articles across the sector. His reporting spans cryptocurrency markets and the broader fintech industry, tracking not only price action but also the technological and regulatory forces shaping the ecosystem. To support his analysis, Kosta actively leverages on-chain data and metrics from leading platforms such as Santiment, Glassnode, and CryptoQuant, enabling deeper, evidence-based market insights. He believes in the power of transparency and the data that underpins the blockchain ecosystem. His academic background in Marketing Management from Denmark further complements his analytical approach, adding a strong understanding of communication strategy and content positioning to his work.
