MiCA's Fungibility Gap: One Stablecoin or Two?

If regulators treat a stablecoin issued by Entity A in Ireland and the same-named token issued by Entity B in Luxembourg as the same asset, they effectively endorse a model where consumer protections depend on the weakest link in a chain of issuers. A user might hold tokens backed by reserves they cannot verify, governed by rules they cannot access, in a jurisdiction they have never heard of.

If regulators treat them as separate assets, they risk fragmenting liquidity. Tokens that look identical on a blockchain but carry different regulatory classifications would create confusion for exchanges, DeFi protocols, and everyday users.

For issuers that have already secured MiCA compliance, the regulatory uncertainty around multi-issuance presents an opportunity. Circle, which issues both USDC and EURC, operates under a single-issuer model that sidesteps the question entirely.

MiCA’s stablecoin provisions have been fully applicable since June 2024, with broader rules for crypto-asset service providers taking effect later that year. Europe is now the world’s most comprehensive laboratory for how regulated stablecoins function at scale.

One additional wrinkle: MiCA generally excludes unique non-fungible tokens from its scope, but large issued series or fractionalized NFTs deemed fungible could fall under regulation. The fungibility question does not affect only stablecoins. It is a definitional fault line running through the entire European crypto regulatory framework.