ECB Push Prohibits US Increases Stablecoins Profit

The European Systemic Risk Committee recommends banning the Multi-Yushuns stable coin. This is a move that coincides with the European Central Bank’s campaign to limit use. The core motivation is to raise concerns about foreign influence and the protection of European financial sovereignty.

Promoting sovereignty over stability

The European Systemic Risk Committee (ESRB) recommendation reflects growing concern over foreign influence in the European financial system, banning multi-user stability. The proposal to prohibit providers such as Circle and Paxos from issuing identical tokens to jurisdictions while maintaining reserves in only one EU member state, fits with the European Central Bank (ECB) strengthening campaign, limiting the use of the stability of multiple issuance in the region.

According to a Bloomberg report, the ESRB’s ban recommendations reveal EU concerns about foreign influences in the European financial system. The report added that ESRB guidance is legally non-binding, but heavy. The board, chaired by ECB President Christine Lagarde, includes central bank governors and top officials in the EU, whose recommendations are expected to pressure national regulators to act or justify inaction.

As one of Stubcoin’s most vocal critics, Lagarde has emerged as being particularly supported by US dollar reserves. Her opposition is rooted in a broader vision of European financial sovereignty. She previously warned that allowing foreign holders to claim assets from EU-based issuers would introduce “significant legal, operational, liquidity and financial stability risks at the EU level.”

The ECB president’s concerns are not theoretical. The ECB presentation starting in April emphasized that these stable coin reserves are typically held in dollar denominated assets other than the block. This undermines the EU’s savings and investment coalition agenda and weakens control over capital flows.

ESRB supporters point to the recently passed genius law. This specifically requires issuers to hold dollar-based assets, including demand deposits and short-term US Treasury bills, as a test of the multi-user ban proposal.

The proposed ban is considered important to US-based Stablecoin publishers like Circle and Paxos. Both are operated under EU licenses, but they maintain reserves, primarily in the US.

Spokesmen from Circle, Paxos and various EU market authorities declined to comment, but insiders suggest that the ECB’s stance could conflict with previous support from the European Commission for the multiple issues model.