The European Banking Authority and the New York State Department of Financial Services (NYDFS) have signed a memorandum of understanding to police cross-border stablecoin activities.
The EBA said on Tuesday that the deal is part of its duties under the Markets in Crypto-Assets (MiCA) Regulation and sets out principles and procedures for exchanging information and coordinating stablecoin supervisory activities, market trends, and risks between New York and the European Union.
NYDFS said the deal would “enhance the supervision of entities engaged in stablecoin activities, identify market trends and risks, and promote the integrity of the stablecoin market.”
Banks and major financial institutions in the US and Europe have tested using stablecoins for payments, spurred on by laws regulating the tokens in the US and EU. The global stablecoin market has grown to more than $319 billion as of Wednesday, according to DefiLlama.
Source: European Banking Authority
Some of the information the two watchdogs will share includes the issued stablecoin, total volume in circulation, the number of holders, results of external and internal audits and the regulatory standing of specific products and services.
The MOU also provides a framework for the two regulators to assist each other and coordinate efforts during crises or emergencies. However, only supervised entities’ stablecoin-related activities will be monitored, not all activities a company might conduct.
Related: ‘Stablecoins’ are an outdated term from crypto’s early years: A16z
US President Donald Trump signed stablecoin regulations into law in July, while the European Union’s Markets in Crypto-Assets framework came into effect toward the end of 2024. US dollar-denominated stablecoins currently make up the lion’s share of activity in the sector, with Tether’s USDT and Circle’s USDC 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 plateaued after rapid expansion, entering a consolidation phase as new regulation, liquidity constraints, and higher real-world yields weigh on new issuance.
Xue added that a cautious macroeconomic environment, combined with competitive Treasury yields, further reduced appetite for rapid stablecoin expansion.
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