In a recent big move, Europe’s Eurosystem central bank payment systems are now accessible to non-bank payment service providers in the region. This marks a big shift in stablecoin regulations.
Two of such payment systems are SEPA and TIPS. The European Central Bank (ECB) published this decision on January 25, 2025. The apex bank noted that these payment and e-money institutions are now eligible for the services.
EU Shift to Fuel Stablecoin With New Regulation
As part of the new development, the eligible institutions must deposit customers’ funds in a separate account. As shared by Circle’s Policy Head, Patrick Hansen, this could be a Centralized Exchange (CEX) or a central bank.
This is the regulator’s way of ensuring that such funds are safeguarded. Also, the ECB is focused on increasing the efficiency and smooth functioning of the retail payment sector.
Primarily, the latest decision is deeply rooted in the Instant Payments Regulation. It became effective at the beginning of this year.
It holds the potential to reduce EU residents’ reliance on traditional banks for fiat settlements. In the long run, it creates a more level playing field while boosting competition and innovation in EU payments.
To complement these benefits, this decision favors stablecoin and fintech firms, whose banking engagements were relatively restrictive.
Federal Reserve’s Plans to End Debanking
While the ECB works on having this development implemented, the United States Federal Reserve is pushing to end debanking in the region.
According to FOX Business journalist Eleanor Terrett, the American central bank has retracted its statement, which initially mandated staff to consider any activity deemed “controversial.”
During a Senate Banking Committee hearing held on Tuesday, Federal Reserve Chair Jerome Powell said the bank is likely to “take a fresh look” at debanking.
This move became necessary after Coinbase brought evidence of Operation Chokepoint 2.0 into the limelight.
Three months ago, the American cryptocurrency exchange approached a court, requesting that the Federal Deposit Insurance Corporation (FDIC) be ordered to release specific documents related to Operation Chokepoint 2.0.
These documents include “pause letters” advising banks to freeze some crypto activities. Unfortunately, this directive has played a huge part in stifling the crypto ecosystem in the US.
The comment from Powell marks a shift from a leader who was at the helm of affairs in the past administration.
Changing Regulations, Big Win for the Crypto Industry
Donald Trump became the President of the United States (POTUS) less than a month ago. His administration is putting effort into changing crypto regulatory policies.
Hence, the Federal Reserve has chosen a different part. Putting an end to debanking aligns with the focus of the new leadership administration.
Generally, the outlook of the cryptocurrency sector has improved, especially with several nations becoming more receptive towards digital assets.
Apart from the states in the US, quite a number of countries are considering the establishment of a Bitcoin (BTC) strategic reserve. To this effect, some have started exploring legislation to back this move.
Russia is looking at the possibility of having Bitcoin added to its investment portfolio. Anton Tkachev of the New People party and a deputy of the State Duma has urged the government to add Bitcoin to the list of reserve currencies.
Beyond Russia, the Czech Republic, Switzerland, and the USA are also pushing for related products. At this rate, the crypto sector may experience a huge push in its acceptance and adoption.
