In short, yes and no.
This will be topical as the EU is due to announce this week what it thinks it can do. The key point is that if they rule that all Euro-Clearing has to happen in the EU , then major banks will have to comply and so will move their operations from London.
One key issue I see is that even though this is aimed squarely at London, it will have to apply to all global jurisdictions - so it is a massive act of protectionism. Thus, in part, it will undermine the Euro as a world reserve currency if you can only clear it in London.
The EU thought about this level of idiocy with the Financial Transaction Tax - an idea that they really wanted to do in Brussels, which has now entered the realms of no longer being discussed officially as we blogged about last year.
This will be because self-inflicted wounds are not such a great idea and are not popular either.
With Euro-Clearing they may argue that hundreds, maybe thousands of jobs will come from London (again, let's all pretend automation is not happening people and already 80% of trades are fully automated even to settling!). So it can be sold domestically to the EU as screwing the UK - fine for Germany and France - but what do Italy and Spain get except a less fungible currency? Why will they go for this just because Brussels wants to show off?
Surely the UK can offer incentives to keep this business (not regulatory oversight) in terms of lowering transaction costs.
To me this issue is a very important one to watch for Brexit as it sums up the key dilemma - screw the UK for political reasons or do a deal for rational economic ones. I think it might be a bellwether for the negotiations as a whole.