The European Union should clarify rules for identical stablecoins issued across borders, a senior Bank of Italy official said on Thursday, urging uniform standards to protect users.
Stablecoins – crypto assets pegged to traditional currencies or commodities – have created friction between the European Commission and the European Central Bank. They are also known as electronic money tokens (EMTs).
The Commission has been asked to clarify whether EU rules allow EMTs issued by a licensed EU firm to be treated as interchangeable with the tokens issued by non-EU entities of the same company, under a so-called multi-issuance model.
Sources told Reuters in June the Commission believes interchangeability is allowed under EU rules. The ECB, however, has warned of financial stability risks.
In a speech delivered at an international central bank conference on payments, Bank of Italy Deputy Governor Chiara Scotti said “clarity at the legislative or standard-setting level would be both timely and valuable”.
Under a multi-issuance model, EU stablecoin issuers may face redemption requests from holders outside the bloc, with the third-country entity expected to transfer assets to cover any shortfall in reserves, said Scotti, who spent two decades at the Federal Reserve System before joining the Bank of Italy.
“Although this architecture could enhance global liquidity and scalability, it poses significant legal, operational, liquidity and financial stability risks at EU level,” especially if one issuer is outside the EU, she said.
“Holders, whether resident or non-resident, view all tokens as interchangeable. This can lead to a mismatch between obligations and available reserves.”
The EU in 2023 adopted an extensive set of crypto asset rules, known as MiCAR.
“In a multi-issuance model, third-country issuers are not necessarily subject to the same consumer protection, transparency, and disclosure requirements as those set out in MiCAR,” Scotti said.
“To mitigate these risks and avoid regulatory blind spots, issuance should be limited to jurisdictions that uphold equivalent regulatory standards, ensure redemption at par, and enforce cross-jurisdiction crisis protocols.”