Hailed globally as a standard-setter for digital finance, the European Union’s landmark Markets in Crypto-Assets (MiCA) regulation is hurtling toward a moment of truth that presents both a profound opportunity for market leadership and a significant risk of strategic isolation.
This point of tension centres on concerns regarding monetary sovereignty, fueled by the potential role of stablecoins.
This anxiety has culminated in the European Central Bank (ECB) and the European Systemic Risk Board’s push to restrict or even ban the ‘multi-issuance’ model; currently the only mechanism through which US dollar-denominated stablecoins can be made available in the EU.
If this restriction is enforced, the consequence is not stability; it is isolation.
The ECB’s cautious approach stems from a misconception. The fact that today’s crypto markets are already 99% USD-denominated reflects global liquidity and investor confidence, not a failure of European policy design. The task is not to eliminate this reality but to build a robust Euro alternative.
Unfortunately, MiCA renders this alternative uncompetitive. The framework’s stability rules, shaped by past volatility concerns, impose demanding and costly conditions for stablecoins. If MiCA is reopened, these provisions should be revisited.
Consider the reserve requirements. MiCA demands that at least 30% of reserves be held in EU bank deposits; a mandate that ties issuers directly to the traditional banking system and introduces unnecessary counterparty risk. This is a severe handicap compared to the US model, which allows 100% in high-quality liquid assets (HQLA) like short-term Treasuries.
Furthermore, MiCA’s reserve concentration limits force issuers to work with up to 14 UCITS management companies just to stay compliant. This fragmentation creates a slow, expensive and structurally rigid model for Euro stablecoins, lacking the speed and flexibility necessary to take on US or other international issuers.
The debate over multi-issuance is MiCA’s first major test, challenging the EU to align regulatory ideals with global market reality.
Multi-issuance (the ability for a globally compliant entity to issue identical tokens across both the EU and non-EU jurisdictions) is not a threat; it is the essential lubricant of the modern digital economy. Global stablecoins offer powerful advantages for corporate treasury operations, cross-border payments and for maintaining liquidity in decentralised markets.
Restricting this model suggests a belief that Europe can wall itself off from global financial flows. In that scenario, liquidity and innovation will flow elsewhere.
This intensive focus on regulatory mechanics rather than on the strategic commercialisation of MiCA validates the stark assessment from Mario Draghi, who warned that the EU is at high risk of lagging in the global digital economy. A wholesale CBDC alone won’t compete. While Central Bank Digital Currencies (CBDCs) offer secure settlement, stablecoins are currently the only production-grade option that offers programmable, interoperable assets for collateral and cross-border use, enabling integrated tokenised capital markets.
The moment for political clarity is now. A European Parliament hearing on the 17th of November will bring together the Financial Services Commissioner and the ECB President to discuss this very issue.
MEPs must decisively push back against the restrictions by explicitly validating the multi-issuance model. They must demand regulatory clarity that MiCA-authorised stablecoins can be used as a settlement asset and collateral in EU capital markets, even outside the DLT Pilot Regime.
Stablecoins are not a threat to monetary sovereignty; they are a test of it. By validating the multi-issuance model and applying existing risk-mitigation tools like EU-only redemption and reserve reporting, MEPs can shift efforts away from blocking the future to building it.
Tom Duff Gordon is the Vice President of International Policy at Coinbase.
