The European Commission may issue new regulations on stablecoins, ignoring warnings from the European Central Bank.

According to reports, the European Commission plans to announce new rules for the rapidly growing stablecoin market in the coming days, despite warnings from the European Central Bank that the proposed rules could destabilize the banking sector in the eurozone during market volatility. Sources familiar with the matter revealed that the European Commission plans to release formal guidance, proposing to treat stablecoins issued outside the EU as having equal status with those circulating exclusively in the EU market. Sources say that the guidance is expected to be announced in the next few days. The European Commission proposed legislation in June 2023 for the creation of a digital euro (a so-called central bank digital currency), but progress has been limited since then. The European Central Bank views the launch of the digital euro as a response to the promotion of stablecoins by former US President Donald Trump. Stablecoins are cryptocurrencies typically pegged to the US dollar. ECB President Christine Lagarde reiterated on Monday in front of the European Parliament, stating that the digital euro is crucial for Europe to achieve financial autonomy. She targeted privately issued competitive stablecoins, claiming that these currencies "pose a threat to monetary policy and financial stability" as they may lead to withdrawals from banks and their value is not always stable. A spokesperson for the European Commission stated, "For a well-managed stablecoin with adequate collateral, the possibility of a 'run' is very low." The spokesperson added that even if this were to occur, "foreign holders would also redeem their tokens in the US, as most tokens are in circulation there and most reserves are kept there."