The European Central Bank told EU finance ministers on May 22 that a Brussels think tank's plan to grow Europe's stablecoin market is too risky to adopt. The pushback, reported by Reuters Business, lands at a moment when euro-denominated stablecoins hold roughly 0.3% of a $300 billion global stablecoin float that grew by about a third over the last year.
The paper at the centre of the meeting came from Bruegel, written by Lucrezia Reichlin, Bo Sangers, and Jeromin Zettelmeyer. It proposed two concrete steps: relax the liquidity reserve requirements that MiCAR places on stablecoin issuers, and consider letting euro stablecoin firms tap ECB funding, including a possible lender-of-last-resort role. Several central bankers at the Nicosia meeting publicly objected to both ideas.
The proposal the ECB sent back
Bruegel's argument is straightforward. Dollar stablecoins set the rails for most crypto settlement, on-chain trading, and a growing share of cross-border payments. Europe has the regulation, MiCAR has been in force since 2024, but the euro tokens it produced are not gaining share. Circle's EURC, the largest of them, ranks twentieth among stablecoins by supply. Bruegel framed regulatory relief and central bank backing as the missing ingredient.
The ECB does not accept that framing. Its position, restated in Nicosia and earlier this month by Christine Lagarde, is that a deeper euro stablecoin market creates two specific problems. Deposits that move from bank accounts into stablecoins raise banks' funding costs and shrink the pool of money they can lend. Large, fast redemptions of stablecoins under stress can transmit shocks back into bank balance sheets the ECB would then have to absorb. Granting ECB liquidity to private issuers would invert the relationship the central bank has with commercial banks and put taxpayers on the hook for token-issuer balance sheets.
Lagarde has been clearer about what she does want. She has argued for tokenized commercial bank deposits as the European answer to programmable money, paired with a retail digital euro. That stack keeps deposit money on bank balance sheets, keeps the ECB's transmission channel through banks intact, and avoids creating a parallel monetary aggregate the central bank cannot directly steer.
A regulatory gap with the United States
The transatlantic split matters here. The US GENIUS Act, passed in 2025, sets a lighter capital and liquidity floor for stablecoin issuers than MiCAR. That asymmetry is what Bruegel was trying to close, and it is also why dollar stablecoins keep extending their lead. Tether and Circle issue from jurisdictions that allow them to scale their reserves into short-dated US Treasuries with minimal friction. Euro issuers operating under MiCAR cannot match that operating posture.
The Qivalis euro stablecoin coalition, backed by 37 banks across 15 countries, is the institutional path that does fit the ECB's preferred shape: a bank-issued instrument inside the existing regulatory perimeter rather than a fintech token chasing ECB backing. The May 22 rebuff effectively tells the rest of the market that this is the only path Frankfurt will support.
Knock-on effects for crypto cards and spend
Most crypto cards issued in the EU rely on USDC or USDT for the moment-of-spend conversion, even when the cardholder is in Germany, France or Italy. The economic reason is simple: deeper dollar stablecoin liquidity gives card programs tighter spreads at the on-ramp and off-ramp. A euro stablecoin large enough to challenge that would let issuers settle in the same currency consumers earn and pay taxes in, which trims FX exposure for both the user and the program operator.
The ECB's stance closes off the fastest path to that outcome. Euro stablecoin growth will now have to come through either bank-led issuance like Qivalis, krona-denominated bank stablecoins and other national-currency variants, or eventual ECB-issued digital euro infrastructure. None of those are quick. Card issuers planning around a single-currency settlement layer for European users should assume a longer wait.
For stablecoin-backed spending on existing cards, nothing changes today. The available rails stay dollar-heavy. The Bruegel paper is on a shelf in Nicosia, and the structural reason euro stablecoins are 0.3% of supply is the same reason they were 0.3% last quarter: the central bank does not want them larger.
Overview
The ECB used the May 22 Nicosia meeting to publicly reject a Bruegel proposal that would have eased MiCAR liquidity rules and given euro stablecoin issuers access to ECB funding. Frankfurt's reasoning rests on deposit flight and weakened monetary policy transmission, not on token risk in the abstract. Lagarde continues to prefer tokenized commercial bank deposits, which keep deposit money inside the banking system. Euro stablecoins remain at 0.3% of a $300 billion global float and, after May 22, have no near-term regulatory path to close that gap.
