Regulatory Radar #4

The recent passage of the U.S. GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins) has sent regulatory ripples across the Atlantic. As the U.S. takes a bold step toward stablecoin regulation, European officials are parsing its implications for the EU's digital finance strategy. This post summarizes the reactions from Brussels and other EU institutions, and what they could signal for the future of transatlantic crypto policy.

Brussels Watches Closely: Strategic Opportunity or Regulatory Risk?

Following the enactment of the GENIUS Act, which establishes a comprehensive framework for the issuance and oversight of U.S. dollar-backed stablecoins, EU officials have been quick to respond. While there’s a broad consensus that regulatory clarity is welcome, reactions across European institutions reflect a blend of strategic caution and competitive awareness.

• European Commission (EC) - Cautious Validation: EC officials welcomed the move in principle. A senior official from DG FISMA noted that the U.S. stablecoin law "reflects a long-overdue commitment to serious digital finance regulation," but cautioned that it may accelerate "regulatory arbitrage pressures in Europe."Internal Commission briefings reportedly highlighted that GENIUS "validates the core logic of MiCA" (the EU’s Markets in Crypto-Assets Regulation) by requiring reserve backing, redemption rights, and prudential oversight for stablecoins. However, there is some concern that the U.S. framework offers "greater operational flexibility" for issuers, which could attract new entrants to the American market.

• European Parliament (EP) - Split views : EP members of the Economic and Monetary Affairs (ECON) Committee were split. Some MEPs praised the GENIUS Act as an important move toward global regulatory convergence. Others, particularly from the Greens and center-left S&D groups, expressed fears that the U.S. might become "a permissive haven" for dollar-denominated stablecoins unless supervision is strictly enforced.
• The GENIUS Act’s multi-issuance provisions — allowing both bank and non-bank entities to issue stablecoins under specific regulatory conditions — were noted with interest in Brussels. Some policymakers view this as a potential competitive advantage for the U.S. system, given MiCA’s more cautious approach to non-bank issuance.

The ECB Sounds the Alarm: dollarization risk

The most vocal critique came from the European Central Bank. ECB board member Piero Cipollone warned in a recent speech that the GENIUS Act could "turbocharge U.S. stablecoin issuance" and lead to "a gradual dollarization of European digital payments." He called for urgent coordination within the eurozone, saying the ECB must *"not be caught off guard by a wave of dollar-linked assets outpacing the digital euro."

President Christine Lagarde echoed these concerns more diplomatically, stating that while the ECB supports responsible innovation, "the risk of monetary fragmentation is real if non-euro stablecoins dominate retail transactions in Europe."This has reignited debate over MiCA’s adequacy in ringfencing the eurozone against foreign digital currency inflows.

The Transatlantic Outlook: Divergence or Dialogue?

The passage of the GENIUS Act is already influencing how EU officials are thinking about future legislation. One tangible impact: renewed calls within the Commission to reassess MiCA’s thresholds on foreign stablecoin issuance. Some voices within the EC are urging a faster rollout of the digital euro to mitigate dependence on dollar-based tokens.

At the same time, there is cautious optimism that GENIUS might revive stalled talks around U.S.-EU cooperation on crypto supervision. European lawmakers have long pressed Washington to deliver a harmonized framework, and now that one exists for stablecoins, there may be momentum to align supervisory practices.

As one senior MEP put it: "MiCA was first. GENIUS is faster. The question now is: can we meet in the middle before market fragmentation gets worse?"

Final Take

The GENIUS Act’s passage marks a pivotal moment in the global race to regulate digital assets. For the EU, it brings both a challenge and an opportunity: to defend the integrity of its digital currency regime while leveraging this moment to deepen international cooperation. Whether the transatlantic stablecoin landscape will converge or diverge may depend as much on political will as on policy architecture.

Stay tuned for more insights in the next edition of Regulatory Radar!

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