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Euro Zone Weighs Support for Euro-Backed Stablecoins Amid U.S. Dominance

By  |  October 7, 2025

Euro zone finance ministers are set to deliberate on Thursday how to strengthen the presence of euro-denominated stablecoins, aiming to ensure that Europe is not sidelined in the rapidly expanding digital currency market, according to Reuters. A senior euro zone official stated that ministers will explore ways to encourage the development of such digital assets, which remain overwhelmingly dominated by U.S. dollar-based alternatives.

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    Stablecoins are digital tokens pegged to a traditional currency or asset to maintain price stability. The market for these assets is currently estimated at around $300 billion but could expand tenfold over the next decade, per Reuters. Nearly all stablecoins in circulation are tied to the U.S. dollar, a dominance reinforced by recent U.S. legislation known as the Genius Act, passed in July, which requires issuers to back stablecoins with U.S. dollars or U.S. Treasury assets.

    “So the discussion is basically how should we position ourselves towards all this,” said a senior euro zone official involved in preparing for the meeting. The talks come as European policymakers seek to avoid falling behind the United States in the global digital finance landscape.

    Related: Italy’s Economy Minister Flags US Stablecoin Policy as Bigger Threat Than Tariffs

    Last month, nine major European banks, including ING and UniCredit, launched a euro-denominated stablecoin intended to bolster Europe’s position in the digital payments market. However, euro-backed stablecoins currently represent only about $620 million of the total $300 billion in circulation, underscoring the scale of the challenge.

    According to Reuters, ministers will also assess whether the EU’s existing regulatory framework—the Markets in Crypto-Assets Regulation (MiCA)—needs updating to foster innovation and competitiveness. The discussion will include examining whether current rules strike the right balance between mitigating risks and promoting financial innovation.

    “The ministers will discuss whether we have got the right balance between risk mitigation and promoting financial innovations, whether we should be more supportive, if there are some regulatory issues that we need to fix to better nurture the development of high quality European stable points and also discuss how all this links together with the digital euro,” the official said.

    The discussions are seen as preliminary steps toward a broader strategy. “This is very much an early engagement. It is mainly about putting this issue in the hands of finance ministers, getting their attention, first reactions, and we will then see where it takes us later,” the official added.

    Source: Reuters