The European Central Bank warns that stablecoins could trigger a bank run crisis, while the EU Commission states: The risks of MiCA are still within a controllable range.

The European Central Bank (ECB) previously stated that stablecoins (Stablecoin) might trigger a bank run crisis. In response, the European Commission (European Commission) emphasized in a report released on 6/25 that the risks associated with stablecoins are still within controllable limits under the regulation of the Markets in Crypto-Assets Act (MiCA).

The European Central Bank warns that the issuance of cross-border stablecoins may weaken regulation.

The European Central Bank issued a document on April 10 expressing significant concerns about the model of jointly issuing stablecoins (Multi-issuance) with third countries, while assessing the impact of this model on the financial stability of the EU, regulatory sovereignty, and MiCA. Here are several risks identified by the European Central Bank:

Undermining EU financial stability: If issuers within the EU have insufficient reserves, it could trigger a large bank run.

Bypassing EU regulations: Issuers from third countries may use this to claim "EU compliant" status and evade MiCA regulations.

Legal Responsibility Confusion: Regulatory agencies need to be responsible for the solvency of issuers within the EU and in third countries, as well as for risk spillover.

The ECB believes that this will undermine the security guarantees for consumers within the EU, threatening regional financial stability. The framework diagram provided by the European Central Bank indicates that:

US Coin and EU Coin are the dollar versions of the same stablecoin issued in the US and EU markets, independently managed by the same issuer according to local regulations for reserves and redemption mechanisms.

The circulation of US Coin reached 100 billion dollars, while EU Coin only has 1 billion dollars.

MiCA requires EU Coin to have a 1:1 reserve, be redeemable for free at any time, and at least 30% of the reserves must be held in Central Bank.

If American users redeem EU Coin on a large scale, it may trigger funding pressure, therefore the European Union has set a limited issuance mechanism to control risks.

The European Commission responded in June that the risk of a bank run is extremely unlikely.

According to reports, the European Commission responded in June through an official statement, adopting a relatively loose stance compared to the European Central Bank and emphasizing:

"Even if a bank run on stablecoins does occur, redemptions will mainly happen in non-EU countries like the United States, because most of the token circulation and reserve assets are not originally in Europe."

In addition, the Executive Committee pointed out that the MiCA framework itself sets thresholds for foreign stablecoins, thus effectively preventing their widespread circulation in the Eurozone.

Foreign stablecoins have stepped back due to the MiCA ruling, and differences between the two sides remain.

To further clarify market concerns, the European Commission recently released a research report, which states:

The current MiCA regulations have imposed significant restrictions on foreign stablecoins.

Major stablecoin issuers like Tether (USDT) have chosen not to register in Europe, as they are unwilling to comply with the requirement to hold at least 60% of their reserve assets in European banks.

The MiCA effectively serves as a barrier, making it difficult for foreign stablecoins to enter and develop extensively in the Eurozone. Overall, the divergence in stablecoin regulation between the European Central Bank and the European Commission still exists. ECB President Christine Lagarde pointed out on June 24 that the cross-border circulation of stablecoins poses risks to monetary policy and financial stability, and comprehensive regulatory rules must be established.

However, the European Central Bank has also been accused of overemphasizing the threats of stablecoins, partly to promote its digital euro plan, but the plan itself still has internal controversies regarding its design and impact. The European Commission, on the other hand, is more open and believes that a more flexible approach should be taken towards the development of stablecoins, ignoring the ECB's unilateral warnings.

( The digital euro is entering the countdown stage! European Central Bank: It may be launched as early as October this year, still awaiting legislative approval )

In this article, the European Central Bank warns that stablecoins may trigger a bank run crisis, while the European Commission states that the risks of MiCA are still within controllable limits. This was first reported by Chain News ABMedia.