The New York State Department of Financial Services (NYDFS) and the European Banking Authority (EBA) have signed a memorandum of understanding on regulatory cooperation, establishing an information-sharing and coordination mechanism for stablecoins. While not legally binding, this document demonstrates that U.S. local regulators and EU regulators are attempting to further align stablecoin regulations.

Memorandum focuses on information sharing

According to the disclosure, the 22-page document outlines the procedures for exchanging regulatory and confidential information between the two parties, covering regulated entities related to stablecoins. In the event of serious operational or financial difficulties, both parties will promptly notify each other and coordinate responses within their respective jurisdictions.

This means that if stablecoin issuers or related institutions encounter problems in cross-border operations, New York and European regulators hope to reduce information lag and avoid a reactive approach after risks have already spread. According to the document, upon request, the two sides can also exchange information regarding civil or criminal investigations.

Risks of decoupling and bank runs are drawing attention.

This collaborative arrangement comes as European regulators have become more cautious in their statements regarding the risks of stablecoins. European Central Bank officials recently mentioned the risk of runs on stablecoins and the potential for them to weaken Europe's control over monetary and economic matters.

One of the core uses of stablecoins is to facilitate faster flow of funds between different platforms and regions. However, the strong cross-border nature of these products also makes regulatory responsibility more easily dispersed. In the event of de-pegging, liquidity shortages, or operational failures, multiple jurisdictions often need to intervene simultaneously.

US dollar stablecoins still dominate.

In 2023, Circle's USDC stablecoin plummeted to $0.87 due to the Silicon Valley Bank crisis, becoming a prime example of stablecoins potentially de-pegging under stress. Since then, regulators have increasingly focused on reserve transparency, redemption capabilities, and emergency communication.

European Central Bank officials also pointed out that almost all stablecoins currently in circulation are denominated in US dollars, with other currencies accounting for a very small share. For the market, this memorandum itself will not directly change the rules of stablecoins, nor does it equate to the introduction of unified regulatory standards, but it demonstrates that cross-border regulatory cooperation is moving from statements of principle to more concrete operational arrangements.