Bank of France Urges Direct EU Oversight of Crypto Firms

The Bank of France is urging the EU’s top markets regulator to step in and directly oversee major crypto firms operating across the bloc, highlighting growing concerns over the industry’s oversight.

In a speech delivered on Thursday, François Villeroy de Galhau, Governor of the Bank of France, urged that oversight powers for crypto businesses be transferred to the European Securities and Markets Authority (ESMA) to ensure consistent enforcement of rules across all member states.

As reported by Bloomberg, Villeroy criticized the current regulatory framework under the EU’s Markets in Crypto-Assets (MiCA) regulation, which allows crypto companies to obtain licenses from individual member states and use them to operate across the entire 27-nation bloc through a “passporting” system. 

He argued that this system may undermine uniformity in regulatory standards and expose the EU to risks in the event of market stress.

“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 stated.

His remarks come amid rising concerns about stablecoin regulations, particularly those issued by companies operating both inside and outside the EU. The European Central Bank has also been pushing for a ban on jointly issued stablecoins within the bloc and other jurisdictions.

Circle Internet Group Inc., the largest stablecoin issuer in Europe, currently uses the multi-issuance model to support its $76 billion dollar-pegged token, USDC, within the EU. 

The company received an electronic money license in France last year under the existing MiCA framework, which permits stablecoin providers to maintain a local reserve in one EU state while issuing similar tokens internationally.

Pushback against proposed EU stablecoin rules

However, several groups that represent crypto and payment companies don’t agree with the possible new rules being discussed. On October 6, these groups sent a letter to the European Commission saying that if the EU changes its rules about how stablecoins are issued in multiple places, it could make it harder for these companies to do business.

They said that the current system, which allows global stablecoins to work across countries, is important because these stablecoins make up almost all of the market. Changing the rules could cause Europe to fall behind other parts of the world.

So far, the European Commission hasn’t replied to the letter. This shows there is a clear disagreement between the regulators who want stricter control and the companies who want clearer rules and to stay competitive.

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