The European Systemic Risk Board (ESRB), a group of European central bank authorities, has released a report on three crypto asset issues that it believes are key to the rapid growth of crypto assets: stablecoins, crypto investment products (CIPs), and multifunctional groups (GMFs).
The report, shared by Spain’s central bank, focuses on the European Union’s systemic risks stemming from crypto assets and its recommendations, with an emphasis on stablecoins, known in Spanish as stablecoins.
Global stablecoin market capitalization more than doubles This growth has continued since the ESRB released its 2023 report on crypto assets and decentralized finance two years ago. “Part of this growth is due to US crypto policies that encourage the adoption of USD-denominated stablecoins,” he notes.
The organization highlights that stablecoins and traditional finance are increasingly interconnected, even through the reserves of commercial banks that support their pegs. The report therefore highlights the need to ensure that eligible reserve assets within the EU are of high quality and liquidity.
Additionally, the report notes that crypto investment products are becoming increasingly accessible to institutional and individual investors as part of their increasing integration into traditional finance, creating a hidden risk in regulating them.
Specify the GMF that provides these products. Can operate even with an opaque corporate structure and resort to cross-border regulatory arbitrage. “This could pose challenges to effective supervision, particularly if the group is based outside the EU,” he clarifies. The report therefore calls for formal supervisory cooperation mechanisms and reporting obligations.
In addition to this, this highlights the risks to financial stability emanating from stablecoins jointly issued by EU and third country companies.
Underlines that stablecoins jointly issued by the European Union and third-country institutions have inherent vulnerabilities and create risks to regional financial stability.
On the other hand, he points out that: Large-scale issuance of stablecoins could force holders to request refunds Pressure on European Union issuers’ foreign exchange reserves could increase, delaying repayments and increasing large-scale intra-regional withdrawals.
On the other hand, restrictions placed by third country authorities on the transfer of reserves between jurisdictions could exacerbate these risks during periods of tension, it added.
ESRB urges European Union to take action by 2026
“The EU’s Cryptoassets Market Regulation (MiCA) does not explicitly provide for the joint issuance of stablecoins by entities in the EU and third countries and therefore fails to address the associated risks,” the ESRB warns. I need an action plan.
Under this policy, the ESRB recommends that the European Union clarify by the end of 2025 which schemes are permitted under the current framework of the MiCA regulation.
Failing this, it calls on relevant authorities (e.g. the European Commission, European supervisory authorities and national supervisory authorities) to reduce the risks to financial stability arising from such systems through appropriate safeguards.
In his view, safeguards should include, for example, stronger supervisory measures, closer international cooperation and the introduction of necessary legal reforms. and The majority of these will come into force in 2026, and the rest by the end of 2027..
The ESRB expects to monitor the implementation of this recommendation and has made it clear that underlying authorities will need to communicate the measures adopted in response to this report, in addition to justifying the reasons for inaction in case of inaction.
As reported by CriptoNoticias, the initiative Consistent with advances in European organizations In terms of the definition and application of regulations regarding the cryptocurrency ecosystem, such as the Spanish-maintained registry of virtual asset service providers.