The EU ignores the warnings from the European Central Bank, relaxes MiCA regulations and approves cross-border stablecoins.

According to Gate News bot, as reported by UseTheBitcoin, the European Commission plans to slightly relax MiCA rules to allow equal use of stablecoins both within and outside its territory. Reuters reports that the new proposed rules aim to enable the interchangeability of unapproved stablecoins in the global market with certified stablecoins issued only within the EU. Therefore, the licensing process for the issuance of stablecoins will not be as strict as previously envisioned in the MiCA rules.

The decision to slightly relax the MiCA rules was made amid growing internal opposition, particularly from the European Central Bank, which has issued warnings about potential risks to financial stability. Nevertheless, the European Commission will ignore the warnings from the European Central Bank and proceed with its decision, with guidance expected to be released shortly.

It is anticipated that the European Commission will officially announce a proposal to consider stablecoins issued outside the EU as interchangeable with the same brand of stablecoins issued only in the EU market. Earlier this week, European Central Bank President Christine Lagarde opposed plans to enable stablecoins during a speech at the European Parliament.

According to reports, she stated: "Stablecoins pose risks to monetary policy and financial stability, and therefore must be subject to sound regulations, especially during cross-border operations."

The European Commission is expected to issue guidance to address the legal issues raised earlier this year by French banking regulators. Market participants anticipate that plans to relax MiCA rules will simplify compliance processes. Even if the European Central Bank opposes the current restrictions, it may not be significant, as existing data shows that some companies have still found ways to circumvent these limitations. Furthermore, the recent policy stance of the European Central Bank highlights that Europe’s importance in the global cryptocurrency market is declining.

Stablecoin issuers must hold reserves at EU banks and provide redemption services for users who want to exchange tokens back to fiat currency. While the new guidelines will not change this requirement, they are expected to promote interoperability across jurisdictions. The decision aims to abolish regulatory provisions that hinder cross-border transactions of stablecoins. A spokesperson for the European Commission, who spoke on condition of anonymity, refuted claims about MiCA and stablecoin risks, stating: "A well-governed and adequately collateralized stablecoin is unlikely to experience a run. Even if a run occurs, foreign holders will redeem their tokens in the US (or other countries), as most tokens circulate in the US and most reserves are held in the US."

Although the European Central Bank has expressed concerns about the cross-border redemption process, the European Commission insists that the existing reserve rules provide sufficient safeguards. The decision to relax the MiCA rules may reassure stablecoin users across the EU, as stablecoins approved in more regulatory-friendly jurisdictions like Malta can soon be exchanged with stablecoins from other places.