The stablecoin realm has seen incredible adoption over the last few years. Fiat currency-pegged cryptocurrencies have become a cornerstone of the industry. The US made history last month when the House of Representatives passed the GENIUS Act to bring more clarity to the stablecoin market. The Act was signed into law soon after by President Trump. The US’s fast-moving momentum in regards to the crypto industry may have caused its partners to sweat. The European Union (EU) is now accelerating its plans for a digital euro, according to a Financial Times report.
How Competitive Will a Euro-Pegged Stablecoin Be Against US Dollar-Pegged Coins?
According to the Financial Times report, the digital euro is expected to be launched on a public blockchain, like Ethereum or Solana. The European Central Bank (ECB) has been working on a digital euro for quite a few years now. The ECB stated that it is considering “different technologies — both centralised and decentralised — in the development of the digital euro, including distributed ledger technologies.“
US dollar-pegged stablecoins are expected to increase demand for the US dollar. EU officials are worried that the dominance of dollar-based coins in the EU could question the position of the euro. They believe a digital euro is needed to safeguard the dominance of the single currency over the continent. In April of this year, ECB’s executive board member Piero Cipollone stated that USD-pegged stablecoins “raise concerns for Europe’s financial stability and strategic autonomy.” Cipollone further added that “Europe cannot afford to rely excessively on foreign payment solutions.“
Also Read: Wyoming Becomes First to Launch State-Issued Crypto Stablecoin
While the EU is working on a digital euro backed by the European Central Bank, the US has made clear regulatory oversight for companies issuing US dollar-based stablecoins. President Trump has taken a very pro-crypto stance in his second term. Even the SEC’s new head is a pro-crypto candidate. Both President Trump and the SEC head aim to make the US the global crypto capital. The EU may be lacking a pro-crypto stance within its leadership.