MiCA 2.0 Review Puts Stablecoins at Center of Europe's Crypto Debate

The European Commission will open its MiCA 2.0 review later this year. The central question is how to handle the $310 billion wall of dollar-backed stablecoins that has reshaped the payments landscape since the original rules were written.

Dollar-pegged tokens now account for roughly $310 billion of the $311 billion total stablecoin supply, according to DeFiLlama. Non-dollar alternatives have less than 1% of the market. The European Central Bank has been clear about the danger. ECB officials have warned that this dominance could weaken the central bank's influence over monetary policy inside the eurozone.

John Orchard, chairman of the Digital Monetary Institute at OMFIF, said ECB officials have gradually softened their stance on stablecoins held in bank balance sheets or used for remittances. They remain reluctant to let stablecoins play a meaningful role in wholesale financial settlements. The United States has moved faster on that front. Congress passed the GENIUS Act, which created a regulatory framework for payment stablecoins under the Fed and the Office of the Comptroller of the Currency. That law lets issuers hold reserves in government securities.

MiCA, by contrast, generally requires reserves to flow back into the banking system. European policymakers are now considering whether to shift toward the U.S. model and allow stablecoin reserves to be invested in European money market instruments instead of being routed through banks.

That reserve-management question touches a deeper structural gap. The eurozone lacks a unified Treasury bond market, the kind of deep, liquid sovereign-debt pool that underpins the dollar stablecoin ecosystem. Some experts have proposed creating a synthetic European safe asset by letting stablecoin reserves buy money market instruments issued by European governments. That would provide an alternative to the U.S. Treasury-backed model without requiring a single euro-area bond.

A parallel debate is playing out over whether stablecoin issuers should be allowed to distribute yield to holders. Banking groups in Europe and the United States have opposed interest-bearing stablecoins, arguing they could push depositors out of traditional banks and into blockchain wallets. The European Commission is reviewing the question. Major changes look unlikely, according to the source.

One initiative that has drawn attention is Qivalis, a consortium of European banks and financial institutions working on a euro-denominated stablecoin. Because the participants are already licensed banks, they can satisfy reserve requirements internally. The project aligns with the European Union's broader goal of reducing reliance on the dollar and strengthening financial independence.

Another unresolved issue is how to treat multi-issuance stablecoins such as Circle's USDC, which is issued by different legal entities in different jurisdictions but remains a single fungible asset for users. Catarina Veloso, director of regulatory and compliance at Notabene, said MiCA originally intended to support such models. Implementation sparked concerns at the ECB over the associated risks. Stablecoins derive much of their value from operating seamlessly across borders, Veloso argued. Fragmenting them into region-specific versions would reduce their usefulness in international payments.

European regulators are also weighing whether to transfer more supervisory authority to the European Securities and Markets Authority. Centralized oversight could improve consistency across the bloc. Critics say it would add bureaucracy and slow innovation. Industry participants, including crypto trading firm B2C2, have stressed that any MiCA reforms should preserve Europe's ability to attract digital asset businesses while letting firms scale internationally.

The commission is expected to publish its first proposals before the end of the year.