The European Banking Authority and the New York State Department of Financial Services (NYDFS) have signed a memorandum of understanding to control cross-border stablecoin activities.
EBA he said on Tuesday that the transaction is part of the company’s obligations under the Markets in Cryptocurrency Regulation (MiCA) and sets out rules and procedures for the exchange of information and coordination of stablecoin oversight activities, market trends and risks between New York and the European Union.
NYDFS he said the transaction would “strengthen oversight of entities engaged in stablecoin activities, identify market trends and risks, and promote stablecoin market integrity.”
Banks and major financial institutions in the US and Europe have tested the operate of stablecoins for payments, prompted by regulations governing tokens in the US and EU. As of Wednesday, the global stablecoin market has grown to more than $319 billion, According to to DefiLlam.
Source: European Banking Authority
Some of the information that both regulators will share includes stablecoins issued, total volume in circulation, number of holders, results of external and internal audits, and the regulatory situation of specific products and services.
The MoU also provides a framework for both regulators to assist each other and coordinate efforts during crises or emergencies. However, only the activities of supervised entities related to the stablecoin will be monitored, and not all activities that the company may conduct.
Related: “Stablecoins” is an obsolete term from the early days of cryptocurrencies: A16z
US President Donald Trump signed stablecoin regulations in July, and EU regulations on cryptocurrency markets came into force at the end of 2024. Currently, USD-denominated stablecoins account for the lion’s share of activity in the sector, with Tether’s USDT and Circle’s USDC being the two largest by market capitalization.
Jimmy Xue, co-founder of quantitative yield protocol Axis, told Cointelegraph in January that the global stablecoin market has largely stabilized after rapid expansion, entering a consolidation phase as novel regulations, liquidity constraints and higher real-world yields weigh on novel issuance.
Xue added that the cautious macroeconomic environment, combined with competitive government bond yields, has further reduced appetite for rapid stablecoin expansion.
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