EU Accelerates Euro Stablecoin Push, Backs DLT to Counter US Dollar Dominance

The European Union is accelerating efforts to counter the dominance of U.S. dollar-backed stablecoins by exploring a multi-pronged strategy centered on regulated euro-pegged stablecoins and distributed ledger technology (DLT). The initiative, outlined in a recent blog post by ECB adviser Jürgen Schaaf, highlights growing concerns over the potential marginalization of the euro in global digital finance as U.S. initiatives, including President Donald Trump’s executive order on stablecoins, gain momentum [1]. Schaaf emphasized that while a central bank digital currency (CBDC) remains a long-term goal, immediate action is needed to address the current imbalance.

Schaaf’s proposal centers on regulated euro stablecoins as a flexible tool to support the euro’s global standing. He argued that such stablecoins, if designed with robust risk controls, could directly meet market demands and offer a faster alternative to the delayed digital euro rollout. This approach aligns with broader EU efforts under the Markets in Crypto-Assets (MiCA) framework, which aims to create a regulatory environment conducive to stablecoin development. Despite these frameworks, euro stablecoins have seen limited adoption, with former ECB board member Fabio Panetta noting their underutilization even after MiCA’s implementation [1].

To bridge this gap, the ECB has endorsed two DLT pilot projects—Pontes and Appia—launched in July 2025. These initiatives aim to modernize cross-border and domestic payment systems by leveraging blockchain technology. Schaaf described DLT as a critical enabler for financial innovation, capable of improving efficiency in wholesale and retail transactions. The projects also reflect a shift in the ECB’s strategy, which now includes collaboration with private-sector technology providers to accelerate infrastructure upgrades [1].

Regulatory disparities between the EU and U.S. further complicate the landscape. The U.S. has advanced its own legislative agenda, such as the GENIUS Act, while the EU’s MiCA remains the primary regulatory benchmark. Schaaf warned that this divergence could undermine European digital asset initiatives unless addressed through international cooperation. He stressed that proactive measures, including high-standard euro stablecoins and DLT applications, are essential to prevent strategic setbacks [1].

The ECB’s Governing Council is slated to decide on the digital euro’s future by late 2025, following the initiative’s entry into the preparation phase in November 2023. While officials like Piero Cipollone have underscored the digital euro’s role in preserving monetary sovereignty, Schaaf’s analysis advocates for a diversified strategy. This includes combining private-sector stablecoins, DLT infrastructure, and public digital currency to maintain Europe’s financial autonomy in a rapidly evolving digital landscape [1].

Sources: [1] [EU explores Euro stablecoins and DLT to counter US digital asset dominance] [https://invezz.com/news/2025/07/28/eu-explores-euro-stablecoins-and-dlt-to-counter-us-digital-asset-dominance/]