European Central Bank President Christine Lagarde warned of regulatory loopholes in the stablecoin market, stressing that issuers outside the EU should also comply with the bloc’s strict rules.
Speaking at the annual conference of the European Systemic Risk Board, Lagarde highlighted the risks in “joint stablecoin” models where EU and non-EU firms issue tokens together. She noted that while EU entities must meet strict reserve requirements, non-EU partners are often exempt, creating opportunities for regulatory arbitrage. In times of crisis, this could trigger liquidity pressure as investors rush to redeem from the EU-regulated side, she cautioned.
Under MiCA, stablecoin issuers are required to hold substantial reserves in bank deposits and guarantee investors the right to redeem at a 1:1 ratio. Lagarde argued that EU law should only allow partnerships with outside issuers that operate under “equivalent regulatory regimes” and strong safeguards. She also called for international cooperation, warning that risks will always shift toward the weakest link without global alignment.
Meanwhile, the stablecoin market continues its rapid growth. According to The Block, the supply of dollar-pegged stablecoins rose from $256.3 billion in early August to $271.3 billion at the start of September. In the U.S., regulatory easing under the Trump administration has further fueled this expansion.
