ECB President Identifies Regulatory Arbitrage Risk in MiCA Framework
In prepared remarks for the European Systemic Risk Board, ECB President Christine Lagarde pointed to a potential gap in the EU’s landmark Markets in Crypto-Assets (MiCA) regulation.
She called on policymakers to develop rules for situations involving the joint issuance of stablecoins by MiCA-covered entities and non-EU counterparts.
Lagarde proposed that such arrangements be contingent on the non-EU jurisdiction having a regulatory framework equivalent to MiCA, including stringent redemption rights and full reserve backing requirements.
The identified risk is one of cross-jurisdictional contagion, where a run on a stablecoin could concentrate in the EU due to its stronger safeguards, potentially outstripping the locally held reserves and undermining financial stability.
