A growing number of voices have warned about the impact that a “run” on stablecoins could have on traditional financial markets.
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Plans by a consortium of European banks to launch a new stablecoin could draw the region’s crypto-averse investors into the digital assets fold — and potentially speed up efforts to roll out a digital version of the euro.
UniCredit, ING, Banca Sella, KBC, Danske Bank, Dekabank, SEB, CaixaBank and Raiffeisen said Thursday they plan to roll out a new euro-denominated stablecoin in the second half of next year.
Stablecoins are a type of cryptocurrency designed to provide users with greater price stability by pegging to an existing fiat currency — such as the dollar or euro — or commodity. This contrasts with bitcoin or ether, for example, which can often experience sharp moves in valuations.
Floris Lugt, digital assets lead at ING and a representative of the initiative, told CNBC the stablecoin will provide efficient, programmable, peer-to-peer-based payment solutions for users globally.
“They can settle 24/7, across the globe instantly, or near instantly. So that’s a huge benefit for international payments,” Lugt said. “They are lower cost, and it’s also transparent.”
U.S. stablecoins currently dominate the global market, accounting for some 99% of total market capitalization, or $292 billion. Euro-denominated stablecoins are tiny by comparison, with an estimated market cap of about 500 million euros ($587 million).
Tether, the world’s largest dollar stablecoin, saw its market cap top $172 billion recently. It is followed closely by rival Circle’s USDC stablecoin, which has a market cap of about $74 billion.
The new euro stablecoin will be managed by a Netherlands-based company formed by the consortium, and will be licensed and supervised by the Dutch Central Bank, according to the joint announcement.
A recent Citi report said that, in its base-case scenario, stablecoin total issuance volume is likely to hit $1.9 trillion globally by 2030. Its bull-case puts the total at $4 trillion.
“Stablecoin leadership is ripe for the taking in markets outside the USD,” Nic Puckrin, crypto analyst, investor and co-founder of The Coin Bureau platform, told CNBC via email.
“While attempts have been made to launch a euro-denominated stablecoin — for example, Circle with its EURC – these haven’t garnered anywhere near the same interest as USD-denominated tokens.”
It’s a sign of the muted retail appetite for euro stablecoins so far.
But a more closely-regulated product — the new offering will fall under the EU’s MiCAR (Markets in Crypto-Assets Regulation) scope — could help boost demand in the region among more risk-averse European investors and institutions.
“A stablecoin launched by a bank may appear less risky and garner more retail adoption,” Puckrin said.
However, he acknowledged that the added compliance and oversight could put off privacy advocates and crypto die-hards. “This is a double-edged sword,” he added.
Europe’s digital payments push
Thursday’s announcement follows a growing push for greater digital payment autonomy in Europe, as U.S. market dominance grows amid support from the Trump administration.
The European Central Bank is in the process of developing a digital version of the euro, while the U.K. Treasury has said it will bring forward legislation on crypto assets, including stablecoins, before year-end.
Jürgen Schaaf, market infrastructure and payments adviser at the ECB, warned in July that the central bank’s control over monetary conditions in the region could be weakened by dollar stablecoins’ dominance, and called for greater support for regulated euro stablecoins.
Puckrin said the consortium-led launch may also expedite the roll out of a digital version of the euro, which is currently not expected until 2029 at the earliest, according to ECB estimates.
“That’s far too slow to compete with dollar-denominated digital assets, and banks are well aware of that,” Puckrin said.
“The USD-denominated stablecoin market is exploding now that they have been legitimized via the GENIUS Act, and many leading U.S. banks are working on their own versions. It’s reasonable to expect European banks to want a piece of this pie, and the profits that could come with it.”
