EU Fears US Dollar Dominance in Stablecoin Market; ECB Pushes for Digital Euro

The United States' executive order on digital financial technology has sparked concerns in the European Union (EU) regarding the dominance of the US dollar in the stablecoin market. European Central Bank (ECB) executive board member Piero Cipollone addressed the digital euro's role in supporting Europe's financial and strategic autonomy at a panel in Frankfurt on Jan. 24.

Cipollone expressed concerns over the overwhelming dominance of the US dollar in the stablecoin market, with the dollar's share accounting for up to 99% of all stablecoins on the market. He also raised concerns over Europe's growing reliance on international card schemes and the rapid growth of mobile app payments in the EU. Given these concerns, Cipollone reiterated the need for a digital euro to preserve people's access to central bank money and to allow European banks to continue serving a key role in the financial system.

Adding to the EU's concerns, the Trump administration has signaled its intention to further promote dollar-backed stablecoins. In the executive order, the Trump administration pledged to promote the US dollar's sovereignty, including through actions to promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide. However, the order also prohibits the establishment, issuance, circulation, and use of central bank digital currencies (CBDCs) in the US, raising significant challenges for global CBDC development.

While many in the crypto community see the executive order as a confirmation of Trump's pro-crypto agenda, some observers suggest that its ultimate goal is to maintain US dollar dominance worldwide. Attorney David Lesperance told Cointelegraph that the Trump administration would likely be willing to curb CBDC development worldwide, using bargaining chips such as the threat of tariffs to force the EU and other economies to impose a similar CBDC ban.