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EU Risk Watchdog Urges Swift Action on Stablecoin Safeguards

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The European Union’s financial risk watchdog has called for urgent safeguards on stablecoins that are only partially issued within the bloc, echoing growing concerns from the European Central Bank (ECB) about the potential for destabilizing financial runs.

Stablecoins — cryptocurrencies pegged to traditional reserve assets such as fiat currencies or commodities — are designed to maintain price stability. However, the European Systemic Risk Board (ESRB) warned that stablecoins issued both inside and outside the EU present inherent structural risks.

“Third-country multi-issuer schemes — with fungible stablecoins circulating both in the EU and abroad — have built-in vulnerabilities which require an urgent policy response,” the ESRB said in a statement.

RISK OF RUNS AND LIQUIDITY STRAINS

The ECB, led by Christine Lagarde, fears that if confidence in such stablecoins falters, investors could rush to redeem their holdings in the EU, where regulatory protections are strongest.
Such a scenario could lead to liquidity shortages, as EU-based reserves may be insufficient to cover redemptions — potentially forcing the ECB to intervene to stabilize markets.

Lagarde has consistently emphasized that stablecoin issuers operating in the EU and abroad must be held to identical standards, to prevent regulatory loopholes that could import external financial risk into the bloc.

REGULATORY GAPS AND POLICY IMPLICATIONS

Under the EU’s Markets in Crypto-Assets (MiCA) regulation — one of the world’s most comprehensive crypto frameworks — stablecoins are required to be fully backed by liquid reserves.
However, in “multi-issuer” arrangements, where an EU entity and a non-EU entity jointly issue a stablecoin, the stricter EU rules do not apply to the foreign partner. This creates regulatory asymmetry that may allow risk to flow into the EU system.

The ESRB warned that multi-function financial groups issuing stablecoins across jurisdictions may fall under more lenient regimes than traditional financial conglomerates, heightening the risk of divergent prudential standards and undermining the integrity of EU financial supervision.

A CALL FOR COORDINATED OVERSIGHT

The watchdog urged EU institutions to close these gaps quickly through policy coordination and international cooperation to ensure that global stablecoin systems do not exploit differences between regulatory frameworks.

The ESRB’s statement comes as the European Union prepares to implement MiCA fully by 2026, amid growing debate about how to integrate emerging crypto technologies into the region’s financial stability architecture without stifling innovation.

Citi Raises Ether Forecast, Trims Bitcoin Outlook as Investor Preferences Shift

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Citigroup has revised its year-end cryptocurrency forecasts, raising its target for ether (ETH) while slightly cutting its outlook for bitcoin (BTC), citing changing investor behaviour and macroeconomic headwinds.

The Wall Street bank said that investors are increasingly gravitating toward ether’s yield-generating features, while bitcoin continues to rely primarily on price appreciation for returns.

NEW TARGETS AND PRICE OUTLOOK

Citi set a year-end target of $133,000 for bitcoin, representing a 12% upside from its current trading price of around $118,747, as of 05:30 GMT.
For ether, the bank now expects the token to reach $4,500 by year-end — a 3% gain from its current level of $4,375.

The brokerage maintains a positive long-term view, forecasting 12-month targets of $181,000 for bitcoin and $5,440 for ether.

BITCOIN: STRONG NARRATIVE, MIXED MACRO HEADWINDS

Citi slightly reduced its bitcoin forecast due to offsetting macroeconomic factors, including a stronger U.S. dollar and weaker gold prices, which tend to reduce demand for alternative stores of value.
Still, analysts said bitcoin’s “digital gold” narrative remains robust, continuing to attract institutional and retail inflows as global interest in hard assets persists.

Citi’s base case assumes year-end inflows of roughly $7.5 billion into bitcoin, while its bull case depends on rising equity markets and stronger demand from digital asset funds.
Under its bear case, however, the bank warned that a global recession could push bitcoin prices down to $83,000.

ETHER: INSTITUTIONAL INTEREST AND STAKING GAINS

Ether’s upgraded outlook comes after a sharp summer price rally, fueled by institutional buying and ETF-related inflows. Citi analysts said ether’s potential for yield generation through staking and decentralised finance (DeFi) continues to attract capital from long-term investors.

Citi expects ether to remain supported in 2025 by strong inflows from ETFs and digital asset treasuries, which have emerged as a growing segment of crypto demand.
While ether’s downside is harder to quantify, given uncertainties around network usage and value accrual, analysts said the token benefits from a broader use case compared with bitcoin.

INVESTOR FLOWS WILL DRIVE YEAR-END PERFORMANCE

Both cryptocurrencies, Citi noted, are trading above user-activity-based metrics, highlighting the speculative component of current valuations. Sustained investor demand and macro stability will be essential to keeping prices elevated into 2026.

“Ether’s yield advantage and utility-driven narrative are drawing steady inflows,” Citi wrote, “while bitcoin continues to hold its place as digital gold — but faces short-term macro friction.”

Coinbase to Face Narrowed Shareholder Lawsuit After Judge’s Partial Dismissal

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A U.S. federal judge has ruled that Coinbase must face a narrowed shareholder lawsuit alleging it misled investors about key business risks, including the likelihood of being sued by the Securities and Exchange Commission (SEC).

In a 59-page ruling issued Tuesday night, Judge Brian Martinotti of the U.S. District Court in New Jersey rejected Coinbase’s bid for a full dismissal of the case. The lawsuit accuses the cryptocurrency exchange and several of its top executives and board members of fraudulently concealing regulatory and financial risks in public statements over a two-year period.

The shareholders allege Coinbase made misleading claims suggesting it was unlikely to face SEC enforcement, and that customer assets would remain protected even if the company filed for bankruptcy. These statements, made through earnings calls, regulatory filings, blog posts, and social media, allegedly inflated investor confidence.

Judge Martinotti ruled that plaintiffs could not proceed based solely on “group pleading”, where statements in company-wide documents do not specify individual responsibility. However, he allowed the lawsuit to continue for claims where investors provided specific allegations tied to individual defendants, writing, “Where plaintiffs have appropriately provided defendant-by-defendant particularity, the claims must remain.”

In a notable aside, Martinotti criticized the lack of clarity in the plaintiffs’ filings, remarking humorously, “Judges are not like pigs, hunting for truffles buried in briefs.”

Coinbase called the ruling a “significant step forward,” saying it would continue to “vigorously defend against any remaining claims.” Attorneys representing the shareholders did not immediately respond to media requests.

The case stems from major stock drops in 2022 and 2023, including a 26% plunge on May 11, 2022 after Coinbase reported disappointing revenues and added new risk disclosures, and a 12% drop on June 6, 2023 following the SEC lawsuit alleging the company operated as an unregistered securities exchange.

The class action, led by Swedish pension fund Sjunde AP-Fonden, covers investors who bought Coinbase shares between April 14, 2021, and June 5, 2023.

The SEC’s own case against Coinbase was dropped in February 2025, after the Trump administration moved to loosen federal oversight of the cryptocurrency sector, marking a major shift in the U.S. regulatory approach to digital assets.

The case is In re Coinbase Global Inc. Securities Litigation, U.S. District Court, District of New Jersey, No. 22-04915.