Europe

In brief

• Against the protests of the European Central Bank, the EU is planning to soon allow foreign, dollar-backed stablecoins to easily enter European markets, according to a report out Wednesday.
• The about-face is in large part thanks to the likely imminent passage of stablecoin legislation in the United States, a Moody’s analyst told Decrypt.
• Other analysts have warned that if the EU does not embrace the emerging global crypto economy, it could soon become a “flyover zone” for digital assets activity.

Despite the protests of Europe’s top bank, the European Union is poised to soon greenlight the flow of stablecoins issued outside the bloc into the continent, per a new report. It’s a development that signifies a major coup for U.S. dollar-backed stablecoins, according to one of the world’s top credit rating agencies.

The European Commission, the executive arm of the EU, is set to soon issue formal guidance that stablecoins issued in other global jurisdictions should be considered interchangeable with same-branded versions designed specifically for European markets, according to a Wednesday report in the Financial Times.

In recent months, the European Central Bank and its president, Christine Lagarde, have adamantly pushed to restrict the ability of foreign stablecoins—and particularly, stablecoins backed by foreign currencies like the U.S. dollar—from playing too large a role in the European market. Under the EU’s newly implemented digital assets rules, stablecoin issuers operating in the bloc must keep most of their reserves for the currency in a European bank.

Now that may change. And Moody’s, one of the world’s top credit rating agencies, thinks the development is in large part thanks to pressure applied from the recent passage of stablecoin legislation in the United States. 

“This is extremely interesting,” Cristiano Ventricelli, senior analyst at Moody’s, told Decrypt Wednesday. “Because it tells you that what happened in the U.S. is reverberating across the globe.”

Ventricelli contends that the recent passage of the GENIUS Act in the U.S. Senate—a bill that would establish a framework for issuing and trading stablecoins in the United States—has applied pressure on foreign markets to better integrate top stablecoins, even if those tokens are backed by non-Euro currencies and their reserves are held abroad. 

That’s a major upending of the calculus that had previously dictated the EU digital assets markets, he asserted.



“The Euro stablecoin market has counted on the fact that USD stablecoins were limited in terms of the volume that you can transact in Europe,” Ventricelli said. “If the European Commission goes forward on this, [foreign issuers] will not be subject to the limits that were previously set up to prevent USD stablecoins from flooding the European market.”

In recent weeks, finance leaders have warned that the EU’s stringent restrictions on crypto issuers—which were designed, the European Central Bank has said, to mitigate the risk of bank runs and other calamities—would risk turning the continent into a “flyover zone” between more vibrant digital asset economies in the United States and Asia.

Should the EU amend its stablecoin rules, the development could signal a desire, on the bloc’s part, to not fall behind as other major players race forward in passing crypto regulatory frameworks and establishing an integrated, global crypto economy.

In the United States, the GENIUS Act has not yet become law. It must still pass a vote in the House, where Republican leadership is currently squabbling over how best to proceed with other key crypto legislation, before heading to President Donald Trump’s desk for signature.

If the U.S. does ultimately pass a stablecoin bill, Ventricelli said, the impact on other jurisdictions around the world, beyond the EU, could be substantial. 

“The passage of a stablecoin bill will push everyone else to plan accordingly,” he said. “That could have a lot of implications in terms of new stablecoin frameworks coming out in Asia, the Middle East, the UK, all those jurisdictions where we don’t necessarily have [laws] in place.”

Edited by Andrew Hayward

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