ECB Blocks Push to Loosen Euro Stablecoin Rules as Market Tops $300 Billion

The European Central Bank is refusing to soften its stance on euro-denominated stablecoins. At a Governing Council meeting in Nicosia, Cyprus on May 22, ECB President Christine Lagarde and policymakers formally rejected proposals to ease constraints on issuing euro stablecoins. The ECB cited potential risks to bank funding, financial stability and the transmission of monetary policy. The decision comes as the global stablecoin market has expanded to about $300 billion in total supply, roughly one-third higher than in 2025. Euro stablecoins remain a small corner of that market, representing about 0.3% of supply. Disintermediation is the central concern. The ECB argues that making euro stablecoins easier and more attractive to issue could draw funds away from traditional bank deposits and into stablecoin reserve assets. That would weaken a key source of bank funding and could impair the channels through which interest-rate moves feed into lending and deposit pricing. The proposal rejected by the ECB appears tied to a February 2026 recommendation from Brussels-based think tank Bruegel to cut the 30% reserve requirement applied to euro stablecoins under MiCAR, the EU’s Markets in Crypto-Assets Regulation that has governed stablecoins since 2024. The 30% reserve requirement is widely seen as more onerous than rules facing U.S.-regulated stablecoins under the GENIUS Act, enacted in 2025, which imposes comparatively lighter obligations. Dollar-based stablecoins still dominate global usage. Euro stablecoins are so marginal that Circle’s EURC, the largest euro stablecoin, sits only around 20th globally. Europe accounted for 38% of global stablecoin transactions in Q4 2025, yet most of that activity was conducted in dollar-denominated tokens rather than euro products. A consortium of 37 European banks is working on a euro stablecoin with a target launch in late 2026. Market participants say the 30% reserve requirement makes the business case meaningfully harder than issuing dollar alternatives under a U.S. regulatory framework. In parallel, the ECB is building its own rails. Its Appia project is designed to improve interoperability between distributed ledger technology and existing Eurozone banking infrastructure. The ECB’s central bank digital currency initiative has projected potential issuance around 2029. For investors, the ECB’s position complicates the outlook for the planned bank-led euro stablecoin. The consortium would be launching into a regime that may leave euro tokens structurally less competitive against U.S.-regulated products. With the U.S. pursuing a framework aimed at supporting stablecoin expansion and reinforcing the dollar’s role in digital payments, the ECB is treating stablecoins primarily as a banking-stability risk. That trade-off could have an unintended consequence: by prioritizing protection of the legacy deposit base, the ECB may be reinforcing a market reality in which Europeans already use stablecoins at scale—38% of global transaction volume in Q4 2025—but do so mainly through dollar-denominated tokens.