The economic costs of restricting global stablecoins – and how to mitigate the risks

While the EU has established a comprehensive framework for crypto-assets under the Markets in Crypto-Assets Regulation (MiCA), growing institutional scepticism towards multi-issued global stablecoins risks leading to de facto exclusion from the EU market.

This ECRI Policy Brief argues that framing the policy choice as one between full insulation and unrestricted openness is misleading and economically costly. Restricting compliant global stablecoins would weaken EU firms’ competitiveness in cross-border payments, treasury management and tokenised markets; reduce the EU’s ability to shape emerging global standards in digital finance; fragment supervisory oversight by pushing activity offshore; and ultimately hinder the development of euro-denominated stablecoins and EU digital capital markets.

A structured multi-issuance framework is a pragmatic policy solution. Under this approach, the same globally fungible stablecoin can be issued by locally regulated entities across jurisdictions, each holding adequate local reserves and granting enforceable redemption rights to local users.

Dr Judith Arnal is Associate Senior Research Fellow at ECRI and CEPS. Dr Matthew Osborne is Policy Director UK & Europe at Ripple.