Europe is making significant strides in the realm of stablecoins, as the continent seizes the opportunity created by the fluctuating fortunes of the U.S. dollar. With the euro gaining momentum, the European Union’s welcoming stance towards cryptocurrencies is setting the stage for a potential shift in the stablecoin landscape.
Dollar Woes Create Openings
Since Donald Trump’s return to office, the U.S. dollar has been on a downward spiral. The dollar has tumbled to a three-year low against a basket of major currencies, sliding by roughly 5% over the past six months. This decline stems from unpredictable trade policies and a general atmosphere of international antagonism that has left U.S. markets on shaky ground. Treasury yields have spiked, equities have stumbled, and investors are increasingly wary of what was once the world’s most stable reserve currency.
In light of this volatility, global investors are casting about for alternatives. Safe-haven assets like gold have seen renewed interest, but the euro has also been climbing the ranks as a potential reserve asset. Reuters recently reported a growing interest in the euro among central bankers worldwide, alongside traditional stalwarts like gold and the Chinese renminbi. This diversification away from the dollar is poised to make waves in the decentralized finance (DeFi) space.
Euro-Pegged Stablecoins on the Rise
While the USD remains the dominant force in the stablecoin world, with Tether holding a commanding 70% market share, the euro is quietly gaining ground. The number of euro-pegged stablecoins, though currently dwarfed by their USD counterparts, is starting to grow. With the euro approaching a pivotal $1.20, there’s burgeoning optimism that these coins could soon pose a serious challenge to USD dominance.
The European Union has been proactive in fostering this growth, exemplified by the recent implementation of the Markets in Crypto-Assets (MiCA) framework. This regulatory clarity offers crypto issuers a pathway to obtain licenses and establish themselves within a regulated environment. Notably, Tether has yet to align with MiCA, creating a window of opportunity for euro-pegged alternatives like EURC to capture market share. As explored in our recent coverage of Coinbase Securing MiCA License, major exchanges are actively embracing this regulatory framework.
Major crypto exchanges and issuers, including OKX, Crypto.com, and Coinbase, are already securing EU approval, with others like Gemini poised to follow. This regulatory embrace signals a paradigm shift from the EU’s historically cautious approach to digital assets, underscoring its ambition to seize its “global euro moment,” as described by European Central Bank President Christine Lagarde. For a deeper dive into this trend, see our coverage of Kraken securing a MiCA license in Ireland.
The Road Ahead
Despite the promising outlook, the path to euro stablecoin dominance is not without its challenges. The Bank of International Settlements has expressed skepticism, labeling stablecoins a “financial stability risk.” However, the broader ecosystem’s market cap recently soared past $250 billion, highlighting the undeniable size and appeal of the market.
As long as Trump’s policies continue to cast a shadow over the dollar and Europe capitalizes on the fallout, the trajectory seems clear: a gradual shift towards EUR-based coins. Complete de-dollarization may be far-fetched, but with the euro on an upward trajectory, investments and transactions via the continent are set to follow suit.
By 2028, as Trump’s term draws to a close, we could witness a proliferation of EUR-pegged stablecoins challenging their American counterparts. With recession risks and waning investor confidence weighing down the dollar, Europe’s moment in the stablecoin spotlight appears to be just beginning. Whether this trend holds remains to be seen, but the winds of change are unmistakably blowing across the Atlantic.
Source
This article is based on: Europe’s Time Is Now (for Stablecoins)
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Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
