(Bloomberg) — France urged the European Union’s top markets watchdog to start supervising major crypto companies directly after the expansion of major players in the continent.
In a speech Thursday, Bank of France Governor Francois Villeroy de Galhau suggested transferring oversight powers for the sector’s businesses to the European Securities and Markets Authority to guarantee uniform application of standards within the EU.
The Bank of France governor also called for tightening a landmark European framework of digital asset rules that notably allows crypto companies to apply for licenses from individual EU members, which they can use as a “passport” to operate throughout the 27-nation bloc.
The European Central Bank has been winning support for a ban on stablecoins issued jointly in the bloc and other jurisdictions, setting the scene for a clash over how operators like Circle Internet Group Inc. and Paxos Inc. manage their activities across borders.
“This framework would benefit from the much stricter regulation of the multi-issuance of the same stablecoin within and outside the European Union, to reduce arbitrage risks in times of stress,” Villeroy said.
Circle is the largest stablecoin issuer in Europe, relying on the multi-issuance model permitted under the EU’s MiCA rules to support its $76 billion dollar-pegged token USDC in the bloc. The company was awarded an electronic money license in France last year.
Stablecoins are cryptocurrencies that track the price of another asset like the US dollar, typically relying on a one-to-one reserve of traditional funds to support their value. Under the multi-issuance model, licensed stablecoin providers issuing tokens in the EU must maintain a local reserve in at least one member state while they continue to issue and manage reserves for functionally identical tokens overseas.
Urgent clarification of the EU’s support for multi-issuance is needed for companies to operate with certainty, trade associations across crypto and payments warned the European Commission this week. Signatories to the Oct. 6 letter, seen by Bloomberg News, included Blockchain For Europe, the Electronic Money Association and the Digital Euro Association.
“Reopening this settled concept — the only pathway for global stablecoins that represent 99% of the market — risks Europe falling behind,” the groups said in the letter addressed to Maria Luís Albuquerque, the EU’s commissioner for financial services. The Commission didn’t immediately respond to a request for comment.
(Updates with industry letter in eighth and final paragraphs.)
More stories like this are available on bloomberg.com
