EU Regulators Tighten Oversight of Stablecoins and Crypto Markets

In a comprehensive report analyzed by Andrew Henderson and Céline Moille of Goodwin Law, the European Systemic Risk Board (ESRB) outlines growing macroprudential risks tied to crypto-assets, particularly stablecoins, crypto-investment products, and multi-function groups. The ESRB’s findings mark a shift from conduct-based supervision toward systemic oversight, signaling deeper regulatory intervention across the EU.

According to the ESRB, global stablecoin capitalization has reached about $300 billion, with 99% of that tied to USD-backed tokens. The report attributes this imbalance to the lack of viable euro-denominated alternatives and to the rise of complex, cross-border issuance structures that fall outside the scope of the Markets in Crypto-Assets Regulation (MiCA). The ESRB warns that non-MiCA-compliant tokens such as USDT and DAI are widely circulating in the EU through unauthorized platforms. Under MiCA, crypto-asset service providers must cease offering such stablecoins, while EU issuers must maintain reserves domestically and under independent audit.

Beyond stablecoins, the ESRB highlights that crypto-investment products now total $235 billion, dominated by a few custodians and riddled with data gaps on leverage and counterparty risk. The Board urges expanded prudential reporting and stronger resilience measures under the Digital Operational Resilience Act.

Finally, the ESRB calls for a new supervisory framework for vertically integrated “multi-function groups” that combine issuance, exchange, and custody activities, possibly forming the foundation for a future “MiCA 2.0.”

From a compliance perspective, stablecoin issuers and crypto service providers should expect stricter enforcement, enhanced prudential reporting, and closer scrutiny of cross-border operations as EU regulators move toward systemic oversight.