EU Pushes Euro Stablecoin: Crypto Sovereignty War

EU Boosts Euro Stablecoin: The Battle for Digital Financial Sovereignty Against USD

The European Union (EU) is actively promoting the issuance and development of euro-pegged stablecoins. The clear objective of this move is to compete with the current dominance of USD-pegged stablecoins in the global digital currency market. This is not just an EU effort to assert digital financial sovereignty but also to shape a more stable and independent cryptocurrency ecosystem for the region.

Context and Motivation for Euro Stablecoin Promotion

The global stablecoin market is currently valued at approximately $300 billion and is projected to grow tenfold in the next decade. However, USD-pegged stablecoins overwhelmingly dominate, with euro-pegged options accounting for only a very small fraction, around $620 million to less than one billion euros. This dominance has raised concerns in Europe about the loss of euro liquidity and the weakening of monetary policy control if USD-pegged stablecoins are widely used in the eurozone. This situation could lead to a worrying phenomenon of digital "dollarization."

To counter this situation, EU officials, including European Stability Mechanism (ESM) Managing Director Pierre Gramegna and European Central Bank (ECB) President Christine Lagarde, have emphasized the importance of reducing reliance on USD-pegged stablecoins and promoting the development of euro-pegged stablecoins issued by domestic entities.

This momentum is further reinforced by actions from the US, such as the passage of the "Clarity for Payment Stablecoins Act" (commonly referred to as a "Genius" Act in some contexts, though the specific bill name varies) in July 2025, aimed at strengthening the USD's position in the stablecoin market.

MiCA Regulatory Framework and Key Initiatives

The main regulatory framework for stablecoins in the EU is the Markets in Crypto-Assets (MiCA) regulation, adopted in June 2023 and fully effective between mid-2024 and 2025. MiCA sets stringent standards for the issuance and use of stablecoins, particularly e-money tokens (EMTs) pegged to an official currency like the euro. Requirements include licensing for issuers, maintaining fully backed 1:1 reserves, and publishing transparent reports. MiCA is expected to create a safe and reliable environment for stablecoins in Europe.

Eurozone finance ministers are discussing measures to strengthen the presence of euro-pegged stablecoins, including assessing whether MiCA needs updating to foster innovation and competitiveness.

A significant initiative is the announcement by a consortium of nine major European banks, including ING and UniCredit, to launch a euro-pegged stablecoin in the second half of 2026. This stablecoin will be fully MiCA-compliant and supervised by the Dutch central bank, aiming to create a fast, cheap, efficient, and interoperable cross-border digital payment method.

Additionally, several other MiCA-compliant euro stablecoins have emerged in the market, such as Circle's EURC (currently the largest euro stablecoin), Membrane Finance's EUROe, Monerium EUR, and Quantoz Payments' EURQ.

Relationship Between Euro Stablecoins and the Digital Euro (CBDC)

While privately issued euro stablecoins are being promoted, the EU is also developing the digital euro, a central bank digital currency (CBDC). However, the digital euro project is unlikely to launch before 2029 due to slow legislative progress. Privately issued, MiCA-compliant euro stablecoins are seen as a temporary but crucial bridge to foster digital payment innovation while awaiting the CBDC. The ECB believes that the digital euro and euro stablecoins can complement each other, with the CBDC providing a secure and standardized infrastructure.

Potential Benefits for the EU from Euro Stablecoins

Enhanced Competitiveness: Helps Europe avoid being left behind in the rapidly evolving digital currency market.

Financial Sovereignty: Reduces dependence on US financial infrastructure and regulatory risks, protecting the euro's role in the digital economy.

Financial Stability: Provides a reliable and tightly regulated stablecoin option.

Payment Innovation: Simplifies cross-border payments, payroll, B2B transactions, supports programmable payments, and supply chain management, while unlocking the potential for tokenized assets.

Risk Diversification: Helps European investors mitigate currency risks and avoid losses due to USD volatility.

Challenges and Concerns in Euro Stablecoin Development

Despite significant potential, the development of euro stablecoins also faces considerable challenges:

Market Share and Liquidity: Euro stablecoins are still very small compared to major USD counterparts. Achieving the necessary scale and liquidity to compete is a major challenge.

Competition: USD stablecoins have established extensive distribution networks and market trust globally.

MiCA Regulation: Although MiCA provides a clear framework, some experts are concerned that the requirement for stablecoin reserves to hold at least 60% in European banks could create vulnerabilities if banks face financial instability. Additionally, MiCA lacks clear regulations for global companies issuing the same stablecoin from both an EU-regulated entity and a third-party entity.

Necessity of New Solutions: Some experts question whether euro stablecoins truly address a new problem, as Europe already has the SEPA system which allows instant, low-cost, 24/7 euro transfers.

Conclusion

In summary, the EU's push for euro-pegged stablecoins is a strategic move to reclaim its position in the global digital currency race, countering the dominance of the USD. With the MiCA framework established and initiatives from both public and private sectors, the EU is striving to build a robust, secure, and independent euro stablecoin ecosystem, complementing the future digital euro project. This journey is promising but also fraught with challenges requiring continuous adaptation and innovation.

Disclaimer: The content above reflects the author’s personal views and does not represent any official position of Cobic News. The information provided is for informational purposes only and should not be considered as investment advice from Cobic News.