Key Points :
- The ESRB has recommended banning “multi-issuance” stablecoins—those issued jointly inside and outside the EU—citing risks to financial stability.
- The ECB supports this ban and warns that foreign-issued stablecoins may weaken EU monetary sovereignty.
- MiCA (Markets in Crypto-Assets) lacks clear guidance on multi-issuance, sparking institutional conflict between the European Commission, the ECB, and national regulators.
- The EU is pushing forward with the digital euro (a CBDC) as a strategic counterweight to private stablecoins.
- Meanwhile, a consortium of European banks is preparing to issue a euro-denominated, MiCA-compliant stablecoin by 2026.
- The tension between private stablecoin innovation and central bank control marks one of MiCA’s first major tests.
Introduction: The Stakes at Hand
In recent months, the European Union has reignited a crucial debate over the future of stablecoins within its borders. The European Systemic Risk Board (ESRB) has formally recommended that multi-issuance stablecoins—tokens issued jointly inside and outside the EU—be prohibited. This recommendation, while not legally binding, carries significant moral and political weight.
At the same time, the European Central Bank (ECB) is doubling down on efforts to protect the eurozone’s monetary integrity. The ECB and EU policymakers view the advent of widely used, dollar-pegged stablecoins as a threat to financial stability, monetary sovereignty, and regulatory coherence. Within this setting, the EU is simultaneously developing its own central bank digital currency (CBDC)—the digital euro—as a strategic alternative to private issuance.
For investors, blockchain practitioners, and institutions exploring new revenue models, this conflict presents both risk and opportunity. The next few years will likely see regulatory clarity—and fragmentation—emerge, defining which stablecoin paradigms will survive in Europe and, potentially, globally.
1. The Multi-Issuance Problem and ESRB’s Recommendation
What is Multi-Issuance?
A multi-issuance stablecoin structure entails that a single stablecoin (same ticker, interoperable token) is issued by multiple entities in different jurisdictions—e.g. one entity in the EU, another in the U.S.—but fungible across them. In practice, this can create asymmetric control over reserves and redemption obligations.
Why the ESRB Wants to Ban It
The ESRB argues that such a multi-issuance model may allow reserves to be held outside the EU, reducing supervisory reach. In a stress scenario, redemptions initiated from the EU might overwhelm local reserves, while foreign holders redeem from offshore reserves, leading to mismatches and contagion risks.
Though ESRB’s recommendation is nonbinding, it exerts heavy influence on EU and national regulators, especially with ECB backing.
Legal Gray Zones in MiCA
MiCA, the EU’s landmark crypto regulation, does not explicitly refer to multi-issuance models. This ambiguity has generated conflict: the ECB sees multi-issuance as incompatible with MiCA’s prudential safeguards, while the European Commission has sought to interpret it administratively.
National competent authorities are now in regulatory limbo—some hesitant to approve stablecoin issuers whose structure could be deemed multi-issuance. This is one of MiCA’s first substantive credibility tests.
2. The ECB’s Position: Sovereignty, Risk, and the Need for Equivalence
Monetary Sovereignty at Risk
ECB President Christine Lagarde and other policymakers argue that uncontrolled stablecoin growth, especially from non-EU jurisdictions, undermines the eurozone’s control over monetary conditions.
Lagarde has called for foreign stablecoin issuers to be held to equivalent standards within the EU to prevent regulatory arbitrage, and has warned that investors might prefer to redeem tokens in the EU during stress, creating “reserve runs.”
Stricter Rules on Reserves and Redemption
Under MiCA, stablecoin issuers in the EU must always allow holders to redeem tokens at par and maintain robust reserve backing (including bank deposits).
The ECB seeks to extend these requirements to foreign issuers operating within the EU, demanding equivalence in reserve location, liquidity, and transparency.
The Prudential vs. Innovation Tension
The ECB puts strong emphasis on financial stability, while others see too stringent regulation as stifling innovation. The institution’s push to ban or strictly regulate multi-issuance is a direct expression of this philosophy.
3. MiCA’s Interpretive Crisis: Institutions at Odds
Diverging Views: ECB vs. Commission
The ECB and parts of the European Parliament favor an explicit ban on multi-issuance, arguing that MiCA’s prudential objectives implicitly forbid it.
Conversely, the European Commission prefers to manage the issue via guidance and administrative clarifications, avoiding a contentious legislative fight.
National Authorities Hesitant
National regulators (NCAs) are uncertain whether to grant licenses to stablecoin issuers operating across jurisdictions. Some are delaying decisions until clearer interpretations emerge.
MiCA’s Credibility on the Line
This interpretive crisis threatens MiCA’s promise as a harmonizing, globally credible regulatory standard in crypto. If MiCA cannot resolve multi-issuance ambiguity, it could weaken confidence among international players.
4. The Digital Euro: A Strategic Countermeasure
Two Forms: Retail and Wholesale
The EU envisions the digital euro operating in two modes: retail (available to the public) and wholesale (for financial institutions).
Why a CBDC?
- Monetary control and sovereignty: A central bank–issued digital currency prevents dilution of control by private stablecoin issuers.
- Safe, accessible digital cash: The digital euro is meant to be universally accessible, safer than private tokens and fully backed by the central bank.
- Interoperability with stablecoins: The design could allow coexistence, where stablecoins power DeFi, and the digital euro provides a reliable anchor for payments.
Timing and Political Momentum
Lagarde has urged the European Parliament to accelerate legislation for the digital euro, seeing it as an urgent strategic tool against private stablecoin encroachment.
Yet concerns linger: adoption by banks, migration of deposits, and technical design (e.g., privacy vs. traceability) remain contentious.
5. The Bank Consortium’s Plan: A Euro-Stablecoin in the Mix
Just as regulators tighten, nine European banks (ING, UniCredit, CaixaBank, etc.) announced plans to create a euro-denominated stablecoin under MiCA compliance, targeting a 2026 launch.
This bank-backed stablecoin aims to strengthen the eurozone’s digital sovereignty, reduce dependence on U.S. dollar–pegged tokens, and offer fast, low-cost payments and settlement within Europe.
The vehicle will be licensed in the Netherlands as an e-money issuer, ensuring it adheres to robust EU rules.
This initiative could act as a compromise solution: private issuance but under strong institutional backing, aligned with EU sovereignty goals.
6. Broader Context & Global Comparison
U.S. GENIUS Act and Cross-Jurisdiction Dynamics
In July 2025, the U.S. passed the GENIUS Act, formally permitting stablecoin issuance by banks and regulated entities.
Analysts note surprising convergence between GENIUS and MiCA frameworks, raising hopes for transatlantic regulatory alignment.
Research Frontiers: Hybrid Monetary Models
Recent academic work explores hybrid systems combining central bank digital money and private stablecoins, offering resilience and interoperability. For example, a two-layer model where private stablecoins are backed by central bank reserves can blend innovation with systemic safety.
Other innovations, like the JANUS dual-token model, aim to improve decentralization, capital efficiency, and stability via AI-driven mechanisms.
Comprehensive reviews (e.g. SoK studies) are creating standardized metrics and taxonomy to help compare stablecoin designs across jurisdictions.
7. Strategic Implications for Innovators & Investors
Design for Local Compliance
If you plan to issue or integrate stablecoins in Europe, local reserve holding, redemption guarantees, and regulatory equivalence will be essential design constraints.
Watch Regulatory Clarifications
Given MiCA’s ambiguity, the coming months should bring Q&A guidance or formal amendments—these will define acceptable issuer models, including whether multi-issuance can survive in any variant.
Leverage CBDC Bridges
Future stablecoin innovations should consider interoperability or “bridge modes” with CBDCs like the digital euro, to ensure relevance in retail payments.
Focus on Trusted, Transparent Issuance
Regulators are prioritizing issuers with clear governance, strong reserve transparency, and predictable redeemability. Projects lacking that may face exclusion.
Consider Geopolitical & Currency Risk
Because the EU is positioning digital euros and native stablecoins as defenses against dollar dominance, stablecoins built around non-euro assets may face regulatory friction or capital flow scrutiny.
Conclusion
The European Union is navigating a complex crossroad. On one side lies the promise of open, private stablecoin innovation—across borders and ecosystems. On the other lies the imperatives of monetary sovereignty, financial stability, and regulatory coherence. The ESRB’s recent recommendation to ban multi-issuance stablecoins, supported by the ECB, underscores the tension.
MiCA’s lack of clear stance on multi-issuance now places it in its first major institutional stress test. How the European bodies resolve this—whether through prohibition, clarification, or adaptation—will shape not only the fate of stablecoins in Europe but also set precedents for global regulation.
Simultaneously, the digital euro project represents the EU’s strategic move to assert control in the digital monetary space. Private stablecoin innovation will need to live alongside—or perhaps under the umbrella of—central bank architecture. The emergence of a bank-backed euro stablecoin points to one possible bridge between private issuance and institutional legitimacy.
For anyone building or investing in the next generation of crypto and blockchain systems, Europe is becoming a key battleground. Understanding these regulatory winds—and designing for resilience and compliance—will be vital for any project aiming at scale and longevity.
