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EU Central Bank Could Soon Hold Stablecoin Reserves, Says Circle Director

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The European Commission has provided new details on its overhaul of EU payment rules, giving clarity on how the new framework would impact stablecoins.

On June 28, the European Commission put forward a set of proposals to update regulations around stablecoins and other financial services. The reforms, known as Payment Services Directive 3 (PSD3) and the Payment Services Regulation (PSR), aim to regulate digital payments across the European Union (EU).

Today, Eric Ducoulombier, Head of Payments at the European Commission, wrote in a review that one of the proposals will seek:

“to enable non-banks to access payment systems. We also propose remedies to the recurring ‘de-risking’ problem faced by some Payment Institutions and E-money Institutions (EMIs), which should substantially improve their capacity to open and maintain bank accounts.”

This means that stablecoin issuers will be able to open accounts at the European Central Bank (ECB) to custody stablecoin reserves at the bank, according to a tweet from Circle’s Director of EU Strategy & Policy, Patrick Hansen.

In the context of the upcoming review of EU payments rules (PSD/PSD3), some key changes are coming to the EU payments sector. EU Commission head of unit (retail & payments) Ducoulombier:

“We propose to modify the Settlement Finality Directive (SFD) to enable non-banks to access…

— Patrick Hansen (@paddi_hansen) September 19, 2023

These proposals will undergo review by both the Council and the European Parliament before becoming law. The finalized PSD3 and Payment Services Regulation likely won’t take effect until 2026 at the earliest.

The ECB revealed plans a few months ago to begin testing transactions between financial companies using the digital euro, a central bank digital currency issued by the bank, starting in 2024.