The European Central Bank (ECB) announced on Tuesday a decision to allow companies such as Circle, issuer of the stablecoin USDC, to join the Eurosystem.
The decision, due in late January 2025, gives non-bank payment service providers, including payment institutions and electronic money institutions (which can in turn issue stablecoins under MiCA), direct access to the payment systems of Eurosystem central banks, such as SEPA and TIPS.
SEPA, or Single Euro Payments Area, is a euro payment area that allows transfers and payments in euros between countries in the European Union, without additional costs, so that citizens and companies can carry out transactions as if they were in a single country. On the other hand, TIPS (Target Instant Payment Settlement) is a service that facilitates instant and real-time payments, allowing immediate settlements 24 hours a day, every day of the year.
Non-bank payment service providers are companies that offer payment and transfer methods without the need for traditional banking intermediation . Electronic money institutions, meanwhile, are those authorized to issue electronic money and manage payment accounts, which includes companies that issue stablecoins such as USDC under the MiCA regulations.
Circle, more precisely its product, the stablecoin USDC, is recognized in the EU, under the MiCA regulations, as an electronic money issuing company, as recognized by the Central Bank of France since September 2024.
Circle is recognised as an EMI in the EU since 2024. Source: thebanks.eu
They must meet certain conditions
To join the Eurosystem, companies like Circle must meet several conditions according to the ECB document . These include installing and managing the technological infrastructure necessary to connect to the payment system, providing supporting information requested by the central bank, implementing appropriate security controls, and submitting a declaration confirming compliance with the requirements set out in national legislation.
The document enters into force on 9 April 2025. This date is stipulated in Article 7, which states that the decision will apply from that date, following its publication in the Official Journal of the European Union.
Patrick Hensen, the head of Circle’s EU strategy and policy department, confirmed that the company will now be part of the Eurosystem. At X, Hensen noted that this “can reduce the reliance on traditional banks for fiat currency settlements, creating a more level playing field and driving competition and innovation in EU payments.”
Hensen also mentioned that while firms can now maintain settlement accounts, the ECB clarifies that central banks will not be able to offer safekeeping accounts for client funds. He further stated that applications for access should be opened in the second quarter of 2025 (June).
The integration of USDC into systems such as SEPA and TIPS means that European citizens can now use this stablecoin for transactions that previously required physical or digital euros backed by traditional banks.
This is beneficial as it offers greater flexibility and speed in transactions, reduces transaction costs, and provides a stable alternative for payments in an economic environment where cryptocurrency volatility has been a hindrance.
For example, a citizen could directly pay their utility bills using USDC via SEPA, without the need to convert to euros, simplifying the process and potentially reducing fees. Additionally, instant payments via TIPS with USDC could be ideal for emergency situations or international trade, allowing immediate and secure transactions between EU member countries.
This decision not only facilitates further integration of innovative financial technologies into the EU payments architecture, but also fosters a more inclusive and competitive financial ecosystem.
