Bank of France says stablecoins threaten the EU’s monetary sovereignty
He added that direct oversight by the Paris‑based ESMA would prevent regulatory arbitrage and ensure that key players are held to the same standards no matter where they are based.
“The implementation of MiCA is a decisive step forward,” he said. “But its effectiveness requires a more unified approach if we are to protect European investors and maintain a level playing field.”
Villeroy de Galhau also used the speech to speak about the growing threat of dollar‑backed stablecoins. He said that MiCA’s current allowance for the multi‑issuance of stablecoins is a regulatory weakness.
Under the framework, companies can issue the same token both inside and outside the EU while maintaining only partial reserves.
He said that stablecoins could weaken the euro and could lead to an uncoordinated multiplication of private settlement solutions. This would increase the region’s dependence on non‑European and unregulated entities.
Other officials have echoed concerns over multi‑issuance stablecoins. On Sept. 19, Bank of Italy Deputy Governor Chiara Scotti warned that the model could undermine financial stability and should be restricted.
She noted that while multi‑issuance structures may improve liquidity and scalability, they also create significant legal, operational and stability risks, particularly when issuers are based outside the EU.
The European Systemic Risk Board (ESRB), the EU body tasked with monitoring systemic risks, has also taken aim at multi‑issuance stablecoins.
On Oct. 1, the ESRB adopted a recommendation to prohibit the practice both within the bloc and in other jurisdictions. While not legally binding, the move increases pressure on EU policymakers to regulate stablecoin operations more closely.
Stricter regulations can reduce arbitrage risks
Villeroy de Galhau said the answer lies in completing the European regulatory framework:
“This framework would benefit from much stricter regulation of the multi‑issuance of the same stablecoin from inside and outside the European Union, to reduce arbitrage risks in times of stress.”
Villeroy de Galhau’s comments come as the European Commission develops plans to shift supervision of financial sectors, including crypto, from national regulators to ESMA.
On Monday, the ESMA’s Chair, Verena Ross, said the reform would build a more integrated and globally competitive landscape for the EU.
Related:BoE signals flexibility on stablecoin caps amid industry pushback: Report
Passporting issues spur calls for unified supervision
Under the EU’s MiCA framework, licensed crypto firms can utilize a feature known as passporting, which enables them to obtain authorization in one EU member state and enjoy license validity across all member states.
The purpose of this feature is to create a single market for crypto providers, thereby lowering barriers to entry and preventing duplicate applications.
While the passporting system is designed to streamline access to the market, in practice, it risks exposing gaps if national regulators fail to meet their obligations.
In July, the ESMA criticized Malta’s licensing process after finding out that the country’s financial watchdog only partially met expectations in authorizing a crypto company. This raised concerns that weak supervision in one country could lead to a ripple effect across the EU.
On Sept. 15, France’s securities regulator, the Autorité des Marchés Financiers (AMF), also raised concerns about regulatory enforcement gaps tied to the MiCA framework.
The regulator said it may consider refusing the validity of the passporting feature.
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