Challenging U.S. Stablecoin Dominance: European Banks Launch MiCA-Compliant Euro-Denominated Currency

Nine major European banks have formed a consortium to launch a euro-denominated stablecoin compliant with the EU’s Markets in Crypto-Assets (MiCA) regulatory framework. The initiative, set to debut in the second half of 2026, aims to establish a regulated digital payment standard that challenges the dominance of U.S.-based stablecoins and enhances Europe’s strategic autonomy in financial transactions title1^[1]. The participating institutions include ING, Banca Sella, KBC, Danske Bank, DekaBank, UniCredit, SEB, CaixaBank, and Raiffeisen Bank International title2^[2].

The consortium has established a new entity in the Netherlands, seeking an e-money institution license from the Dutch Central Bank. This structure ensures compliance with MiCA, which mandates robust regulatory oversight, consumer protection, and transparency for crypto assets. The stablecoin will be fully backed by euro reserves, minimizing volatility and aligning with the EU’s stringent standards for digital currencies title3^[3]. The project is open to additional banks joining, with a CEO expected to be appointed post-regulatory approval title4^[4].

The stablecoin is designed to enable near-instant, low-cost transactions and 24/7 cross-border payments, leveraging blockchain technology to improve efficiency in financial infrastructure. It will support programmable payments, digital asset settlements, and supply chain management, offering a versatile tool for both individuals and businesses title5^[5]. Fiona Melrose, UniCredit’s head of group strategy and ESG, emphasized the initiative’s role in addressing demand for a trusted on-chain payment solution while strengthening Europe’s financial ecosystem title6^[6].

By creating a euro-backed alternative, the consortium seeks to reduce reliance on U.S. dollar-dominated stablecoins, which currently account for 99% of the global stablecoin market. Euro-backed stablecoins represent less than 1% of the market, highlighting a gap the project aims to fill title7^[7]. The initiative aligns with broader EU efforts to develop a digital euro and tighten regulations on non-EU stablecoin issuers, as highlighted by European Central Bank President Christine Lagarde title8^[8].

The project’s timeline includes finalizing technical and regulatory preparations over the next 18 months, with a focus on securing partnerships with merchants and payment platforms. If adopted widely, the stablecoin could reshape European payment systems, fostering innovation while maintaining compliance with MiCA. The consortium’s collective scale and expertise—spanning eight EU member states—position it to address challenges faced by smaller fintech projects, such as credibility and scalability title9^[9].