Lagarde also highlighted loopholes in the EU's MiCA regulation, especially regarding multi-issuance schemes where non-EU entities can issue stablecoins outside EU rules, increasing systemic risks.

The EU's MiCAR regulation allows stablecoin holders issued abroad to liquidate holdings within the EU, potentially leading to concentrated demand during crises.

Lagarde stressed that international cooperation is essential to prevent regulatory arbitrage and ensure a level playing field in the global stablecoin market, which is crucial for maintaining financial stability.

Italian regulator Federico Cornelli stated that cryptocurrencies, including stablecoins, should not be considered legal tender in Italy, affirming that only the euro issued by the ECB qualifies as such.

Overall, 2025 has seen stablecoin regulation become a central focus worldwide, with the EU, US, and Hong Kong all actively implementing or proposing new rules to better oversee their issuance and treatment.

European Central Bank President Christine Lagarde emphasized the need for the EU to implement safeguards and equivalence regimes for foreign stablecoin issuers to prevent risks like reserve runs, calling for stronger legislation and international coordination to establish global standards.

Lagarde warned that stablecoin issuers often promise instant redemption at par but invest in assets that may lack liquidity, risking destabilizing market runs, especially during mass redemptions.

Recent regulatory actions across the globe, including the EU's MiCA framework, US legislation efforts, and Hong Kong's new stablecoin rules, reflect a broader trend towards tighter oversight of stablecoins.

She highlighted the risks of cross-border liquidity mismanagement, drawing parallels with banking regulations that require reserve availability, and emphasized that current regulations do not sufficiently protect against the pressures of mass redemptions.

Lagarde pointed out that in the event of mass redemptions, the pressure on EU issuer reserves could be significant, and existing regulations are inadequate to safeguard against such scenarios.

Lagarde compared potential stablecoin crises to past banking crises, noting that stablecoins lack protections like the net stable funding ratio, making them vulnerable to market shocks and systemic risks.

She warned that during stablecoin runs, investors tend to redeem assets in jurisdictions with stronger protections, such as the EU, where regulations like MiCA prohibit redemption fees, which could deplete local reserves.