European Central Bank Views Euro-Pegged Stablecoins as Strategic Tool for Monetary Autonomy amid Rising US Influence

The European Central Bank (ECB), once regarded euro-affiliated stablecoins as illiquid and risky. However, they have revised their stance, now seeing these digital assets as a strategic tool to defend Europe’s monetary independence. In a blog post from July 28, Jürgen Schaaf, an adviser to the ECB’s executive board, cautioned that without an effective strategic response, Europe’s monetary sovereignty and financial stability might be at risk, given the global reach of U.S. dollar-backed stablecoins.

Galvanized by U.S. Legislation

The ECB’s change in stance comes a few weeks following the passage of the GENIUS Act in the U.S, establishing a federal framework for stablecoins. Schaaf defined this Act as being more lenient in some areas than Europe’s MiCA regulation. He referenced market studies predicting an exponential growth in the supply of stablecoins from USD 230 billion in 2025 to USD 2 trillion by 2028. This expansion could pose a direct challenge to the Euro’s position in the global financial market.

Risk to Monetary Control

The ECB has warned of the potential implications if U.S. dollar stablecoins become popular within the euro area. This could be in the form of payments, savings or settlements. The ECB’s hold over monetary conditions might be undermined. Further, dollar-backed stablecoins, which are being incorporated by companies like Visa, Mastercard, and major U.S. tech companies, are likely to compete directly with Euro-based instruments in cross-border transactions.

Shared Views

The central bank’s perspective was reflected in a 2022 research paper that found Euro-based coins to be less liquid, often sold in a manner similar to risky assets rather than functioning as a vehicle in digital transactions and trading. This research also concluded that stablecoins shouldn’t be regarded as a new class of safe assets, but a less volatile yet risky crypto-asset.

Acknowledging Private Sector’s Role

However, the bank seems to be recognizing the potential role of private-sector solutions, standing next to its primary digital euro initiative. The bank states that the Eurosystem’s digital euro project intertwined with private-sector innovations are supplementary elements in a larger European digital payments strategy.

BlackRock’s Take

According to a recent report by BlackRock, the new U.S. legislation solidifies the role of stablecoins as a payment method. The leading asset management company also pointed to the GENIUS Act as a significant turning point, underlining its focus on stablecoins as payment tools rather than assets. Such a regulation could further-establish dollar dominance by facilitating a tokenized U.S. dollar-based ecosystem for international payments. Concurrently, the stablecoin market soared to $260 billion in 2025, from less than $10 billion in 2020, now accounting for about 7% of the total crypto market.

Euro-Pegged Stablecoin Market

However, the market for euro-pegged stablecoins remains relatively small in comparison to its U.S. counterpart. As per data from CoinGecko, euro stablecoins have a collective market capitalization of merely $487 million, a minuscule portion of the $267.8 billion held by dollar-backed stablecoins. At the time of writing, Circle’s EURC leads the Euro cohort with $210 million in market cap, accounting for nearly half of the entire sector.