The European Central Bank has firmly rejected proposals to relax regulatory requirements for euro-denominated stablecoins, insisting that loosening oversight would pose unacceptable risks to financial stability. The decision came during the European Commission's targeted consultation on reviewing the Markets in Crypto-Assets (MiCA) framework, where some industry participants had called for easing provisions to spur growth in euro stablecoins. The ECB, however, maintained that strict reserve, governance, and disclosure standards are essential to protect monetary sovereignty and prevent deposit outflows from traditional banks.
At the same time, ECB President Christine Lagarde issued a stark warning about the rising dominance of dollar-backed stablecoins, which now command a market near $300 billion. She described the trend as “digital dollarisation,” highlighting the risk that widespread use of dollar-linked digital assets abroad could undermine the euro’s role and Europe’s control over its payment infrastructure. USDT and USDC together account for the overwhelming majority of stablecoin liquidity, and they are deeply embedded in crypto trading, payment cards, and settlement systems.
The ECB’s stance means that MiCA’s rigorous requirements will remain in place, dashing hopes for a lighter-touch regime. Issuers of euro stablecoins—such as Societe Generale’s EURCV—will still face high compliance costs, long licensing timelines, and mandatory reserve audits. This could slow the growth of euro-pegged tokens relative to their dollar-based rivals, which already enjoy deep liquidity and global usage. Lagarde’s warning places digital money squarely at the center of the monetary sovereignty debate, as Europe grapples with how to build competitive euro-based alternatives without sacrificing stability.
