Europe’s stablecoin debate centers on fungibility issue

The European Union’s sweeping crypto rulebook has a gap, and it can be summed up in one word: fungible. As the Markets in Crypto-Assets (MiCA) framework settles into full enforcement, regulators are grappling with a structural question that the original legislation didn’t quite answer. When two separate entities in two separate countries each issue an identical stablecoin, each backed by their own reserves, is that one stablecoin or two? The European Commission is expected to weigh in soon, and the answer could reshape how digital dollars and euros flow across the continent. The multi-issuance problem The core tension is straightforward. MiCA requires stablecoin issuers to maintain 1:1 reserves, submit to regular audits, and meet comprehensive governance standards. But when multiple issuers produce fungible tokens under a shared banner, questions multiply fast. Which regulator oversees which reserves? If one issuer’s reserves fall short, does the entire token lose credibility? Can a user in France holding tokens issued by an entity in Singapore expect the same protections as tokens issued by an entity in Frankfurt? Who’s in, who’s out The urgency of this debate has intensified sinc...