EU Shifts to Public Blockchain for Digital Euro in Race Against US Stablecoin Dominance

The European Union is accelerating its plans for a digital euro, with the European Central Bank (ECB) reconsidering its approach in response to the United States’ passage of the GENIUS Act in July 2025. This U.S. legislation, which established a comprehensive regulatory framework for stablecoins, has prompted European policymakers to evaluate whether public blockchains like Ethereum or Solana could serve as the foundation for the digital euro, shifting from earlier plans for a private, centralized system. The move aims to counter the dominance of dollar-backed stablecoins, which control 98% of the $288 billion stablecoin market, and preserve the euro’s relevance in global digital finance.

The GENIUS Act mandates that U.S. stablecoins be fully backed by dollars or Treasury securities, creating a regulatory environment that has strengthened the dollar’s position in digital markets. This has raised concerns in the EU that the euro could lose ground in cross-border transactions if Europe delays its digital currency strategy. ECB officials are now seriously considering public blockchain infrastructure, which offers immediate access to decentralized finance (DeFi) ecosystems and lower development costs compared to building proprietary systems. Proponents argue that Ethereum and Solana’s existing scalability, security, and developer ecosystems could expedite the digital euro’s integration into global financial networks.

The potential adoption of public blockchains marks a significant departure from the ECB’s original vision, which prioritized privacy and control through private, centralized infrastructure. However, the urgency created by the U.S. regulatory head start—18 months ahead of the EU’s projected timeline—has forced a reassessment. Public blockchains, such as Ethereum, already host over $50 billion in DeFi protocols, offering the digital euro instant liquidity and interoperability. Additionally, public networks reduce infrastructure costs for the ECB and enable permissionless innovation, allowing developers to build applications without seeking approval.

Challenges remain, particularly around privacy and regulatory alignment. Public blockchains inherently offer transparency, with all transactions visible on ledgers, raising concerns about user anonymity. The ECB would need to implement privacy-preserving technologies like zero-knowledge proofs while maintaining compliance with anti-money laundering (AML) requirements. Furthermore, the EU’s Markets in Crypto-Assets (MiCA) regulation, which sets strict standards for crypto issuers, would require special provisions for a central bank digital currency (CBDC) to ensure it aligns with broader financial safeguards.

The ECB’s October 2025 report is expected to clarify its final decision on blockchain architecture. If public blockchains are selected, the digital euro could leverage existing networks to achieve faster deployment, though technical hurdles like transaction throughput and governance models must be addressed. The U.S. implementation timeline, with federal regulations due by July 2026, adds pressure on the EU to finalize its strategy. A successful digital euro launch on public infrastructure would position Europe to compete with China’s digital yuan and U.S. dollar stablecoins, ensuring the euro remains a key player in the evolving digital economy.