EU Eyes Sweeping Crypto Rules as IMF Flags Stablecoin Risks

• EU proposed centralizing crypto oversight under ESMA’s authority.
• IMF warned stablecoin risks could destabilize fragile economies.

On December 5, 2025, the European Union proposed sweeping new rules consolidating crypto oversight, as global watchdogs signaled mounting risk from stablecoins. The European Union aims to streamline regulatory control by empowering the European Securities and Markets Authority (ESMA) to oversee crypto service providers directly. At the same time, the International Monetary Fund flagged systemic risks tied to the rapid growth of stablecoins, alongside significant policy moves by South Africa and the United States.

The European Commission introduced the proposal to grant ESMA authority to supervise crypto-asset service providers (CASPs) across EU member states. According to Cointelegraph, the move seeks to harmonize the enforcement of the Markets in Crypto-Assets (MiCA) regulation, avoiding fragmentation in the EU’s unified market. Under this strategy, ESMA would take over the nation-level "passporting" system, providing direct authorization for CASPs operating across the EU. This reform reflects a comparable approach taken by the U.S. Securities and Exchange Commission, emphasizing centralized supervision to ensure consistent oversight.

Meanwhile, the IMF expressed concern over macro-financial risks posed by stablecoins. Cointelegraph reported the fund’s warnings regarding the potential of stablecoins to undermine monetary sovereignty in weaker economies through “currency substitution.” The IMF further cautioned against cross-border capital flow disruptions and financial instability due to rapid asset fire sales during issuer runs. To address these risks, the fund called for comprehensive global standards and greater international cooperation.

South Africa also advanced its regulatory approach, focusing on mitigating risks from cryptocurrencies and stablecoins in cross-border applications. The South African Reserve Bank announced plans to establish a regulatory framework for cross-border crypto transfers by 2025. Cointelegraph reported that this framework will provide clear reporting standards and administrative requirements for crypto-asset service providers. South Africa’s initiative complements its existing Crypto-Asset Reporting Framework (CARF), aiming to enhance tax transparency through automatic reporting of crypto transaction information.

In the United States, the Commodity Futures Trading Commission (CFTC) took a notable step by authorizing spot cryptocurrency trading on federally regulated futures markets. Cointelegraph highlighted this decision as a measure to bolster investor protection while offering safer domestic trading options compared to offshore alternatives. Acting CFTC Chair Caroline Pham emphasized this as a pivotal move toward incorporating digital assets into regulation-backed financial systems. This decision aligns with recommendations from the President’s Working Group on Digital Asset Markets and represents a significant policy shift in the U.S. crypto industry.

As of December 5, 2025, Circle’s USD Coin (USDC) traded at $1.00, showing a 0.014% change over the past 24 hours, per CoinMarketCap data. PayPal USD (PYUSD) maintained its $1.00 price, with a 0.004% 24-hour decrease as of 15:05 UTC. Meanwhile, USDD exhibited a slight gain, priced at $1.001 with a 0.1% 24-hour increase at 15:07 UTC.