EU Regulator Weighs Ban on Circle, Paxos Stablecoins
Risk Board Pushes for Restrictions
The European Systemic Risk Board, a body created to respond to financial crises in the bloc, has recommended banning multi-issuance stablecoins in the European Union, Bloomberg reported Tuesday. The proposal, passed last week, targets stablecoins issued jointly in the EU and other jurisdictions. While non-binding, the recommendation could influence regulators to tighten restrictions on issuers such as Circle and Paxos that operate across multiple regions.
The move comes weeks later than European Central Bank President Christine Lagarde urged policymakers to close gaps in crypto oversight, highlighting concerns around non-EU stablecoins. A senior official at Italy’s central bank also warned in September that multi-issuance models posed risks to the region’s financial stability.
Investor Takeaway
Impact on Dollar-Pegged Tokens
It is unclear whether the recommendation will advance into law, but it adds to pressure on non-euro stablecoins widely used in the EU. Tokens such as Tether’s USDT, which is pegged to the U.S. dollar, are among the most traded in European markets despite not being linked to the single currency. Analysts say further restrictions could complicate usage for platforms, payment providers, and investors who rely on U.S. dollar-backed liquidity.
The EU’s existing Markets in Crypto-Assets (MiCA) regime already places limits on how stablecoins can be issued and promoted. The new recommendation suggests regulators are considering going further, potentially forcing issuers to restructure their operations if they want to serve EU clients.
Digital Euro on the Horizon
At the identical time, the European Central Bank is weighing its own digital currency. ECB officials have studied the prospect of a digital euro since 2021, with pilot programs and consultations underway. Executive board member Piero Cipollone said last week that EU member states could reach an agreement “by the end of the year,” with a potential rollout targeted for 2029.
“We are designing a secure, reliable and universally accessible form of central bank money for the digital age,” Cipollone said in a Monday speech. “The digital euro, alongside physical cash, can take on a leading role in preserving Europe’s resilience.”
A ban on certain stablecoins could strengthen the case for a central bank alternative by limiting reliance on tokens controlled by foreign issuers. Analysts note that policymakers are viewking to balance financial stability with Europe’s competitiveness in digital assets.
Investor Takeaway
What Comes Next
The ESRB recommendation does not carry the force of law but adds momentum to ongoing debates in Brussels. Lawmakers and regulators will need to decide whether to adopt a ban or pursue narrower restrictions. For issuers like Circle and Paxos, the outcome will determine whether they must localize issuance or risk being shut out of Europe’s market.
For crypto investors, the policy debate highlights a critical divide between the EU and other jurisdictions. While the United States has taken a fragmented approach to stablecoin regulation, Europe appears to be moving toward stricter oversight with an emphasis on domestic monetary control.
The coming months will show whether the ESRB’s recommendation remains a warning shot or develops into binding law, potentially reshaping how stablecoins operate in one of the world’s largest financial markets.
