After the US Congress passed a key law in July regulating the $288.000 billion stablecoin market, European officials accelerated discussions on the future of the digital euro. This was reported to the Financial Times by people involved in the process.
The new regulatory act, the GENIUS Act, raised concerns among European regulators about the competitiveness of the euro and energized discussions that had not been taking place before.
Shift to Public Blockchains
According to sources, after the American law came into effect, European Union officials began considering the possibility of launching the digital euro not on a private blockchain, as previously assumed, but on a public network such as Ethereum or Solana.
This step is being discussed in response to growing concerns about transparency and privacy of transactions in digital currency. However, no official decision on the choice of technology has yet been made. The European Central Bank (ECB) stated that it is considering both centralized and decentralized approaches, including distributed ledgers.
Threat of Dollar Stablecoin Dominance
Government regulation in the US has led to the accelerated growth of dollar-backed tokens, which raises concerns in the EU. According to ECB representative Piero Cipollone, the dominance of stablecoins pegged to the dollar threatens Europe’s financial stability and undermines the region’s strategic autonomy.
He noted that this could lead to an outflow of deposits to the US and strengthen the role of the dollar in international settlements.
Market and Rivals
Amid the decline in cash usage, a digital version of the euro could give European citizens access to a payment instrument backed by the central bank and strengthen the role of the euro on the global stage.
Currently, the largest dollar stablecoins are issued by crypto companies Circle and Tether, while American banks including JPMorgan Chase and Citi are considering creating their own tokens. China’s digital currency, developed by the People’s Bank, is already in the active implementation phase. The Bank of England is also discussing the possibility of issuing a digital pound.
Euro Needs Digital Strengthening
Despite the existence of several euro-denominated stablecoins, the largest of which from Circle has a capitalization of $225.000 million, an official digital token from the ECB could strengthen the region’s position in the digital economy, according to experts.
“Europe cannot afford excessive dependence on foreign payment solutions,” said Cipollone.
The potential launch of the digital euro on a public chain would ensure broad accessibility and use of the asset but would require solutions to address privacy issues.
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