(Reuters) -The European Commission is set to announce new rules for the fast-growing stablecoin market in the coming days, despite warnings from the European Central Bank (ECB) that the proposed standards could destabilise the region’s banks during periods of market volatility, the Financial Times reported on Wednesday.
The European Union’s executive arm is planning to issue formal guidance proposing that stablecoins issued outside the bloc are treated as interchangeable with same-branded versions allowed only on EU markets, the newspaper said, citing people briefed on its contents.
The announcement of the guidance has been scheduled for the next few days, the FT reported, citing one unnamed source.
Reuters could not immediately confirm the report.
Brussels proposed legislation on the creation of a digital euro, a so-called central bank digital currency, in June 2023, but not much has happened since.
The ECB sees a digital euro as a response to U.S. President Donald Trump’s push to promote stablecoins, a type of cryptocurrency typically pegged to the U.S. dollar.
ECB President Christine Lagarde on Monday renewed her plea in the European Parliament, describing the digital euro as key to Europe’s financial autonomy.
She took aim at competing, privately issued stablecoins, saying they posed “risks for monetary policy and financial stability” because they could lure deposits away from banks and did not always maintain their fixed value.
A European Commission spokesperson told the FT that “a run on a well-governed and fully collateralised stablecoin is very unlikely”.
Even if it were to happen, “foreign holders would redeem their tokens in (for example) the U.S., where the majority of the tokens circulate and the majority of the reserves are held”, the spokesperson was quoted as saying.
The Commission did not immediately respond to a request for comment.
(Reporting by Yazhini MV and Mrinmay Dey in Bengaluru; Editing by Kevin Liffey)
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