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Investing.com - The European Commission is preparing to unveil new rules governing stablecoins in the coming days, even as European Central Bank officials warn that the standards could be destabilizing for regional banks during times of market ructions, according to the Financial Times.
Citing people familiar with the matter, the newspaper said the EU Commission is set to announce guidelines that would make stablecoins issued outside the bloc interchangeable with those allowed only in EU markets.
An announcement is slated to arrive in the next few days, the FT said.
The report comes as some lawmakers in Brussels and policymakers at the ECB have been mulling over the creation of so-called digital euro, a central bank digital currency that would stand as a response to U.S. President Donald Trump’s drive to promote stablecoins.
ECB President Christine Lagarde argued on Monday that the digital euro would grant Europe increased financial autonomy, while a stablecoin -- a form of cryptocurrency typically pegged to the U.S. dollar -- would heighten risks for "monetary policy and financial stability" by taking deposits away from banks. Lagarde also suggested that stablecoins do not always maintain a fixed value.
Last week, the U.S. Senate passed legislation that establishes a regulatory framework overseeing stablecoins. In a rare bipartisan move, the upper chamber of Congress approved the bill, which would require these tokens to be backed by liquid assets like U.S. dollars or Treasury bills and make issuers detail the make-up of their reserves every month.
Stablecoins are typically pegged on a 1:1 basis to the dollar, theoretically granting them a constant value. They have become used more frequently as a tool for crypto traders to move assets between tokens.
Should the bill receive support from the House and be signed into law, it would be a milestone for the crypto industry, which has long advocated for a legal framework around stablecoins. Trump, who courted support from the sector prior to his election win last year, has faced calls to usher in these changes.