Italy's Central Bank Calls for EU Stablecoin Regulations

Italy's central bank has called on the European Union to establish clear regulations for the cross-border issuance of stablecoins, emphasizing the need for unified standards to protect user rights. Stablecoins, which are cryptocurrencies pegged to traditional currencies or commodities, have sparked a debate between the European Commission and the European Central Bank.

One of the key issues is the "multi-issuer model," where stablecoins issued by licensed EU institutions are considered interchangeable with those issued by non-EU entities under the same company. This has led to requests for clarification from the European Commission. In June, it was reported that the European Commission believes EU rules allow for such interoperability, while the European Central Bank has warned of potential risks to financial stability.

During an international central bank payment conference, a high-ranking official from the Bank of Italy highlighted the importance of clear regulations at the legislative or standard-setting level. The official noted that under the multi-issuer model, EU stablecoin issuers might receive redemption requests from non-EU holders, requiring third-party entities to transfer assets to cover any reserve gaps. While this structure could enhance global liquidity and scalability, it poses significant legal, operational, liquidity, and financial stability risks, especially when one of the issuers is outside the EU.

The official pointed out that both resident and non-resident holders would view all tokens as interchangeable assets, potentially leading to a mismatch between the issuer's redemption obligations and available reserves. The EU has already implemented comprehensive cryptocurrency regulations through the Markets in Crypto-Assets Regulation (MiCAR). However, under the multi-issuer model, issuers from third countries may not be required to comply with MiCAR's consumer protection, transparency, and disclosure requirements.

To mitigate these risks and avoid regulatory gaps, the official suggested that stablecoin issuance should be limited to jurisdictions that adhere to equivalent regulatory standards, ensure redemption at face value, and implement cross-jurisdictional crisis response agreements. This approach aims to protect users and maintain financial stability in the rapidly evolving landscape of digital currencies.