ECB’s Lagarde Warns Against Multi-Jurisdiction Stablecoins

• Lyla Velez
• September 4, 2025
• Policy
• 0 Comments

Christine Lagarde, President of the European Central Bank, has warned against multi-jurisdiction stablecoins, particularly those issued outside the EU, citing them as a threat to financial stability.

Lagarde’s warning centers on the potential regulatory gaps created by stablecoins, especially those that operate across several jurisdictions. Her stance underscores the critical need for global coordination and regulatory measures to safeguard the EU’s financial system from potential risks.

Christine Lagarde, a pivotal figure in global finance, highlighted concerns over liquidity risks posed by stablecoins.

“Stablecoins should comply with the bloc’s regulatory standards before operating on EU soil… The risk of liquidity mismanagement across jurisdictions is one we have seen before,”

Lagarde stated. She recommended that stablecoins should comply with EU regulatory standards before allowed operation, warning of redemption risks.

Stablecoins pegged partially or fully to the euro face scrutiny, particularly those issued in multi-jurisdictional frameworks. European assets and DeFi protocols relying on these coins could see shifts if regulatory changes occur.

The ECB’s push for tighter regulations reflects a move to prevent challenges observed with previous MiCA regulatory phases. Stablecoins like USDT and USDC, with multi-jurisdictional ties, are at potential risk in this regulatory landscape.

Lagarde’s emphasis on the need for international cooperation signals a complex yet critical regulatory path. Historical instances, such as the 2022 Luna collapse, show potential financial consequences if regulatory frameworks are not thoroughly aligned.

The concern for liquidity and market stability reflected in past incidents suggests increased compliance costs or operational shifts for stablecoin issuers. This situation highlights ongoing financial and structural uncertainties within the crypto industry.