European financial leaders are warning that the EU could fall further behind the US in digital finance unless it swiftly implements harmonised rules for stablecoins, the blockchain-based assets designed to maintain a fixed value. The absence of a unified approach may entrench the dollar’s dominance in the next wave of global finance, risking both monetary sovereignty and innovation capacity within the bloc.
Calls for policy coordination
At the heart of the concern is the European Union’s fragmented regulatory landscape. While the Markets in Crypto-Assets (MiCA) regulation is due to take full effect in 2026, there are growing fears that the delay leaves a critical gap in digital euro competitiveness. The US, by contrast, is seeing rapid growth in USD-pegged stablecoins such as USDC and USDT, which now facilitate hundreds of billions of dollars in cross-border transactions, including in emerging markets and global trade settlements.
Senior officials at the European Central Bank (ECB) and European Commission have expressed alarm that without a faster rollout of operational rules and supervision, European consumers and businesses will continue relying on dollar-denominated digital assets. This trend, they warn, could undermine the euro’s international role and hinder the EU’s fintech sector from scaling effectively.
Stablecoins are becoming financial infrastructure
What was once seen as a niche product for crypto traders is rapidly becoming embedded in broader financial infrastructure. Stablecoins are increasingly used as payment rails, collateral in decentralised finance (DeFi), and liquidity instruments in banking. The ECB recognises the potential risk of privately issued stablecoins competing directly with the digital euro — a central bank digital currency (CBDC) currently in the development phase.
However, rather than supporting domestic alternatives, many European fintech firms continue to adopt USD-backed stablecoins due to liquidity, developer tools, and global acceptance. The result is an ecosystem where the dollar’s influence is quietly expanding beneath regulatory radar, with European institutions largely on the sidelines.
Industry urges faster action
The European fintech and digital asset community is urging Brussels to adopt a more agile, technology-neutral approach. Industry bodies have called for interim frameworks or pilot programmes to enable euro-based stablecoin development and testing ahead of MiCA enforcement. They argue that without near-term guidance, the EU risks ceding another wave of digital financial infrastructure to the US and private issuers.
Some policymakers are also advocating for public-private partnerships to speed up issuance of euro-denominated stablecoins. These initiatives could be coordinated with central bank oversight to ensure monetary policy alignment and consumer protection, while enabling faster integration into existing banking and payment systems.
Implications for European sovereignty
Beyond the economic implications, the issue touches on strategic autonomy. As global trade and capital flows become increasingly digital, reliance on dollar-backed instruments could limit Europe’s influence over future financial norms and technologies. The stakes are not only monetary but geopolitical.
Experts caution that failure to act decisively could lead to a scenario where the euro is marginalised in digital finance, much as it was in global oil and commodity markets. For a continent seeking to shape the future of financial regulation and innovation, the window to assert leadership may be closing rapidly.
REFH – Newshub, 30 July 2025
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