EU vs. US Crypto Power Struggle Heats Up with Digital Dollar and Euro Moves

European Union policymakers are reassessing their digital euro strategy in response to the U.S. passing the GENIUS Act, a new stablecoin regulatory framework. According to the Financial Times, the European Central Bank (ECB) is now considering launching a digital euro on public blockchain networks, such as Ethereum or Solana, rather than the private infrastructure previously preferred. This shift reflects concerns over the growing influence of U.S.-backed stablecoins in cross-border payments and the potential dominance of the dollar in digital finance [1].

The GENIUS Act, passed by the U.S. Congress, regulates payment stablecoins by requiring full reserve backing in cash or short-term U.S. Treasuries. It also mandates compliance with the Bank Secrecy Act and sets a three-year transition period for firms to obtain "permitted issuer" status. The law aims to provide clarity to the stablecoin market while ensuring financial stability and consumer protection [2]. This framework has intensified pressure on the EU to accelerate its own digital euro plans, as policymakers fear losing the euro’s relevance in the global digital economy.

The European Union’s broader Markets in Crypto-Assets (MiCA) regulation, which entered into force in 2023, offers a comprehensive regulatory framework for crypto assets. Unlike the GENIUS Act, which targets only stablecoins, MiCA covers most crypto assets and service providers, creating a passporting system that allows firms authorized in one EU member state to operate across the bloc. The regulation includes stringent requirements for asset-referenced tokens (ARTs) and e-money tokens (EMTs), with the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) overseeing compliance and standards [2].

The differing approaches of the U.S. and EU highlight a divergence in regulatory philosophy. The GENIUS Act emphasizes a centralized, federal oversight model with a role for state-certified regimes, while MiCA promotes harmonized, pan-European supervision through EU agencies and national regulators. These distinctions have practical implications for firms operating in both regions. In the U.S., stablecoin issuers must comply with reserve, audit, and AML requirements, whereas EU firms must navigate a more complex compliance landscape that includes passporting, technical standards, and prudential oversight [2].

Experts suggest that the U.S. approach may create a higher barrier to entry for smaller firms, potentially limiting innovation and competition. Markus Levin of XYO, one of the first companies qualified by the SEC, noted that while the GENIUS Act provides much-needed clarity for stablecoins, broader regulatory frameworks are still needed to address the full spectrum of crypto assets. He emphasized that both the U.S. and EU are working toward clearer definitions of responsibilities among regulators to reduce conflicts and promote a more stable environment for innovation [2].

As the EU and U.S. continue to refine their crypto regulations, the global competition for digital financial leadership is intensifying. Both the ECB and U.S. regulators are under pressure to ensure their currencies remain relevant in the digital age, with the digital euro and U.S. dollar-backed stablecoins at the center of this strategic race. The outcome of these developments will have significant implications for the future of cross-border payments, financial inclusion, and the broader digital economy.

Source:

[1] U.S. Stablecoin Law Jolts EU Into Rethinking Digital Euro (https://www.coindesk.com/policy/2025/08/22/u-s-stablecoin-law-jolts-eu-into-rethinking-digital-euro-strategy-ft)

[2] MiCA vs. GENIUS Act: How Crypto Laws Differ in Europe and the U.S. (https://www.ccn.com/education/crypto/mica-vs-genius-act-how-crypto-laws-differ-in-europe-and-the-us/)