As Stablecoin technology continues to transcend borders, ECB officials insist that policymakers take an international approach to regulation with the immediate implementation of the necessary regulatory, supervisory, and oversight frameworks, such as the MiCA legislation, before the interconnection between these digital currencies and the traditional financial system deepens further.

The European Central Bank (ECB) released their latest report “A deep dive into crypto-financial risks: stablecoins, DeFi and climate transition risk”,, reflecting on the role stablecoins’ and the Crypto-related financial risks.

the ECB wrote in its DeFi report

“As vulnerabilities start to build, an internationally coordinated approach is needed to mitigate DeFi risks before they pose a risk to financial stability,”

“To date, interlinkages with the traditional financial sector have been limited, but they have the potential to grow rapidly given institutional interest.”

Initially serving mainly as a “relatively safe ‘parking space,’” the use cases for stablecoins such as e-money.com's 100% Collateralised European Stablecoins, a project that aims to provide scalable solutions for DeFi systems through various interest-bearing currency-backed stablecoins, have multiplied in recent years which represent another rapidly expanding segment of the crypto market.

While acknowledging that defi platforms employ technology-enabled innovation and differ in certain aspects such as how assets are held, trust is generated and systems governed, the ECB claims they do not create novel financial products but rather mimic those offered by traditional financial providers. At the same time, “defi is in many ways subject to the same vulnerabilities as traditional finance,” the central bank says, elaborating:

"Defi protocols or platforms claim to have a decentralized governance structure, although in reality governance is often concentrated."

Following ECB's report the International Organisation of Securities Commissions (IOSCO) and the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) issued final guidance on stablecoin practices calling for ‘Same Risk, Same Regulation’ confirming that stablecoin arrangements should observe international standards for payment, clearing and settlement systems.

The two global financial industry bodies acknowledged the advantages of stablecoins over the existing payments and financial market infrastructure and provided further clarifications with respect to, the applicability of the the Principles for Financial Market Infrastructures to stablecoin arrangements, determination of systemic importance of a stablecoin arrangement, and settlement finality.

The IOSCO and the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) issued called for cooperation between central banks urging a coordinated approach on an international level to identify and fill the regulatory gaps.

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