The New York Department of Financial Services (NYDFS) and the European Banking Authority (EBA) have signed a memorandum of understanding aimed at coordinating oversight of stablecoin issuers and markets. The MOU marks one of the most significant transatlantic regulatory cooperation arrangements yet for digital assets.
The agreement reflects the increasingly global nature of stablecoin markets and the growing concern among regulators that disruptions involving dollar-backed tokens can rapidly spread across jurisdictions, according to Decrypt. It also highlights how regulators on both sides of the Atlantic are seeking closer coordination as stablecoins become more deeply integrated into payments, trading and broader financial services.
The 22-page memorandum establishes procedures for the exchange of supervisory and confidential information between the two authorities regarding stablecoin-related activities and risks. The agreement is not legally binding, but it creates a formal framework for cooperation between one of the United States’ most influential crypto regulators and the European Union’s banking supervisor.
NYDFS Acting Superintendent Kaitlin Asrow described international cooperation as “essential for the digital asset space,” highlighting the need for regulators to work together to protect consumers and maintain market integrity as stablecoin activity increasingly crosses borders.
The MOU focuses specifically on stablecoin-related activities conducted by entities supervised by either authority. It does not extend to other business activities those entities may undertake. Under the agreement, the agencies will cooperate on supervision, risk assessment and market monitoring, while seeking to promote the safety and soundness of regulated firms and the orderly functioning of stablecoin markets.
The agreement lays out three primary objectives. First, it seeks to enhance supervision of entities engaged in stablecoin activities and improve assessment of associated risks. Second, it aims to foster monitoring of global stablecoin market developments and regulatory changes. Third, it is intended to support the integrity and orderly functioning of stablecoin markets.
Related: Delaware Wants to be the Regulatory Home for Stablecoins
Each authority commits to providing the other, where legally and operationally feasible, with information necessary to perform supervisory responsibilities. The agreement also contemplates cooperation in interpreting information and assessing compliance with applicable laws and regulations. In some cases, one authority may invite the other to participate in supervisory colleges overseeing firms operating across multiple jurisdictions.
Another key focus of the agreement is crisis management. Under the arrangement, the authorities will coordinate during emergency situations involving supervised entities whose activities could affect stablecoin holders, market participants or broader financial markets in either jurisdiction. Such situations could include serious operational or financial difficulties at regulated firms, per Decrypt. In those circumstances, the agencies have agreed to alert one another as quickly as possible and coordinate their respective responses. Authorities may also share information relating to civil or criminal investigations upon request.
The agreement comes amid growing international scrutiny of stablecoins, whose market capitalization has expanded to roughly $314 billion. Regulators remain concerned about the potential for runs, de-pegging events and contagion risks. Decrypt noted that Circle’s USDC briefly fell to approximately 87 cents in 2023 following revelations that reserves backing the token were exposed to the collapse of Silicon Valley Bank.
European policymakers have become increasingly vocal about those risks. European Central Bank Board member Isabel Schnabel recently warned that stablecoins are “subject to the risk of runs” and could undermine Europe’s monetary sovereignty. She also noted that the overwhelming majority of stablecoins currently in circulation remain denominated in U.S. dollars.
For compliance officers and digital asset firms, the NYDFS-EBA arrangement signals that stablecoin oversight is becoming more coordinated internationally. While the agreement does not create new legal obligations, it establishes mechanisms that could make it easier for regulators to identify emerging risks, share investigative information and coordinate supervisory responses across jurisdictions.
