Euro Stablecoin Set to Rival US Crypto Dominance
A consortium of nine European banks, including heavyweights ING and UniCredit, announced on Thursday their plans to establish a new company aimed at launching a euro-denominated stablecoin. This initiative is intended to address the dominance of the US digital market. A number of leading US financial firms are gearing up to introduce their own dollar-backed crypto tokens following President Donald Trump’s enactment of legislation regulating stablecoins, a move that could reinforce US dominance. The adoption of stablecoins, which are intended to uphold a steady value and are supported by conventional currencies, has surged in recent years, particularly among cryptocurrency traders transferring assets to and from more fluctuating tokens.
However, they are also utilized in mainstream digital payments and cross-border transactions. The Amsterdam-based company established by European banks is anticipated to introduce its stablecoin in the latter half of next year. According to figures released last week, while global stablecoin issuance stands at nearly $300 billion, euro-denominated stablecoins totalled just $620 million, with dollar-pegged tokens overwhelmingly dominant. “The initiative will provide a genuine European alternative to the US-dominated stablecoin market, contributing to Europe’s strategic autonomy in payments,” the banks stated. They initiated the endeavor, asserting that it will establish a token designed for swift, low-cost payments and settlements, despite the European Central Bank expressing skepticism regarding stablecoins. In June, ECB President Christine Lagarde informed European policymakers that privately issued stablecoins presented risks to monetary policy and financial stability. She has urged European lawmakers to introduce legislation backing the launch of a digital version of the EU’s single currency as a safer alternative.
Some commercial banks, however, have expressed concerns regarding the introduction of a digital euro, fearing that it would deplete their resources as customers move funds out of banks and into the security of an ECB-guaranteed wallet. Alongside ING and UniCredit, the new company also sees participation from Banca Sella, KBC, DekaBank, Danske Bank, SEB, Caixabank, and Raiffeisen Bank International. It was stated that others could participate in the initiative, and a CEO for the company would be appointed in the near future. A recent report emphasized that emerging market economies, in particular, are turning to dollar-based stablecoins as a substitute for local deposits and cash. “This has created a global monetary dilemma: countries should adopt stablecoins or risk being left behind. Europe is under particular pressure,” the report stated.
In 2023, Societe Generale’s crypto division, SG-FORGE, introduced a euro-based stablecoin. However, it has seen limited uptake, with only 56.2 million euros ($66 million) currently in circulation, as stated on its website. The French bank initiated a US-dollar stablecoin earlier this year, which has a circulation of merely $32.25 million. Bank of America and Citigroup are among the US banks that have been contemplating the issuance of their own stablecoins. Nevertheless, only a handful of banks have successfully introduced one, while the sector continues to be largely influenced by non-bank entities like Tether and Circle.
