"Digital Wealth" Anxiety about Euro Stablecoins

With the implementation of the US stablecoin bill, the EU is exploring ways to accelerate its euro stablecoin plans, but with deep anxiety. EU officials are accelerating their plans for a digital euro after the US passed a comprehensive stablecoin bill. Many Europeans believe the US bill poses a threat to the competitiveness of the EU's single currency. US actions make the EU uneasy. The Genius Act, signed into law by President Trump in July, sets the first comprehensive rules for the $288 billion stablecoin market. Under the bill, issuers of dollar-pegged tokens must hold sufficient liquid asset reserves, meet licensing obligations, and adhere to strict reporting standards. Supporters believe that the framework strengthens consumer protection while still leaving room for innovation, a balance that regulators have always struggled to strike.

The United States' swift move has unnerved European policymakers, who had previously been more cautious in advancing their own projects.

According to the Financial Times, people familiar with the matter said that the EU's shift began after the United States approved the "Guidance and Establishment of a National Innovation Act for American Stablecoins" (also known as the "Genius Act"). Since then, EU officials have been rethinking the architecture of the digital euro project.

Anxiety over whether to use a public or private chain

EU officials are reportedly currently discussing whether the digital euro should run on a public blockchain such as Ethereum or Solana, a departure from previous plans that favored a private ledger controlled by the European Central Bank.

Supporters believe that using an open public blockchain can make the euro more widely circulated and promote its use; while critics warn that public chains expose transactions to censorship and raise privacy concerns.

Open public chains can expand the influence of the euro

The European Central Bank began researching the digital euro in October 2021. Since then, the project has been considered a central bank digital currency. Its purpose is to supplement cash and adapt to a more digital economy. Furthermore, it aims to ensure Europeans can continue to use central bank money. Finally, it seeks to reduce reliance on foreign payment providers. Currently, international card networks process the majority of payments in the eurozone, with non-European companies accounting for 68% to 72% of transactions. EU officials worry that without swift action, the US regulatory framework could accelerate global demand for dollar-backed tokens. As a result, the euro's role in cross-border payments could gradually erode. Some policymakers believe a digital euro based on an open blockchain could enhance its influence outside the eurozone. A euro based on a public blockchain would also be closer to the model promoted by the United States. However, others worry that this would open the door to risks that Europe has long sought to control.

Currently, the two options of whether the euro stablecoin adopts a public chain or a private chain are still under discussion, but with the US move, the debate has become more urgent.