Europe is under pressure: 98% of stablecoins are backed by the dollar, and Tether's USDT dominates the market. Faced with this dependence, the Banque de France is calling for an urgent tightening of the MiCA rules. Why is this threat so serious?
In brief
- Stablecoins linked to the dollar threaten European financial sovereignty and require reinforced supervision via MiCA, according to the Banque de France.
- Current MiCA rules do not sufficiently cover systemic risks, pushing regulators to propose restrictions on payments and reserves.
- We should limit the use of non-European stablecoins, impose reserves in euros and strengthen transparency to reduce dependence on the dollar.
Bank of France vs. Stablecoins: the limits of MiCA exposed
Denis Beau, first deputy governor of the Banque de France, recently pointed out the shortcomings of MiCA, which is already weakened. According to him, current rules do not sufficiently cover the risks associated with foreign stablecoins, in particular their massive use in cross-border payments. To this end, the Banque de France is therefore proposing radical measures. Namely:
- Restrictions on non-European stablecoins for critical transactions;
- Euro reserve requirements for issuers, in order to reduce dependence on the dollar;
- Reinforced monitoring of use cases, in particular for payments of large amounts.
However, these proposals raise fears about data security risks, technical feasibility, and a potential brake on innovation in an already very competitive crypto sector. Especially since stablecoins like USDT are very often used by States to circumvent international sanctions.
USDT: the systemic threat weighing on Europe
USDT, Tether's stablecoin, is omnipresent in Europe. Indeed, nearly 70% of crypto transactions on the continent use it, exposing the markets to American monetary decisions. In the event of a crisis at Tether, the repercussions could be devastating! Notably, the freezing of reserves, extreme volatility, and a widespread loss of confidence.
However, the risks are double for Europe because the Euro has so far been marginalized in crypto exchanges. Additionally, hostile US regulation could make USDT inaccessible, blocking billions of euros in transactions. To deal with this, Europe is therefore relying on local alternatives (stablecoins in euros, digital Euro) and international collaboration to limit the influence of USDT. Will she arrive?
For the Bank of France, stablecoins like Tether's USDT are a time bomb for Europe. Therefore, MiCA must evolve to protect the financial sovereignty of the old continent. But how far should we go? Should we outright ban foreign stablecoins at the risk of slowing down innovation?
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