EUROD: The Euro-Backed Stablecoin Poised to Reshape European Finance and Financial Inclusion

The launch of EUROD, a euro-backed stablecoin by French financial giant ODDO BHF, marks a pivotal moment in the evolution of European digital finance. Pegged 1:1 to the euro and compliant with the EU's Markets in Crypto-Assets (MiCA) regulation, EUROD is not merely a stablecoin-it is a strategic bridge between traditional banking and blockchain innovation. With €150 billion in assets under management, ODDO BHF's foray into stablecoins leverages its institutional credibility and regulatory expertise to challenge the dominance of U.S. dollar-backed stablecoins while addressing gaps in financial inclusion across the Eurozone.

Market Context: Euro-Stablecoins Gain Momentum

Euro-pegged stablecoins have surged in popularity, with their market capitalization rising 44% to $480 million in the first half of 2025, driven by the euro's 12.88% appreciation against the U.S. dollar, according to Holder.io. This growth reflects a broader shift as European institutions seek to localize digital finance. ODDO BHF's entry into this space is timely, given that euro-stablecoin transaction volume has grown 62% quarter-over-quarter, with 7.8% of European crypto transfers now denominated in euro-backed assets, according to the State of European Stablecoins report. By listing EUROD on Bit2Me-a Madrid-based exchange backed by Telefónica, BBVA, and Unicaja-the bank is aligning with a trusted infrastructure that supports both retail and institutional users, as reported by CoinDesk.

The MiCA framework has been a catalyst, shifting 25% of EU trading volume to compliant euro-stablecoins and boosting wallet adoption by 53%, according to the State of European Stablecoins report. This regulatory clarity has made euro-backed stablecoins a safer alternative to USD counterparts, which still dominate 99.85% of the $255 billion stablecoin market, the same report shows. For ODDO BHF, compliance is not just a checkbox-it's a competitive edge.

Institutional Adoption: Bridging Traditional and Digital Finance

ODDO BHF's strategy hinges on its ability to integrate EUROD into existing financial infrastructure. The bank has partnered with Fireblocks, a leader in crypto custody and tokenization, to ensure seamless blockchain interoperability across 60+ networks, according to Holder.io. This collaboration enables fast, secure settlements for cross-border payments and tokenized assets, addressing pain points in traditional finance. For institutional clients, EUROD offers a stable, regulated alternative to volatile cryptocurrencies, with use cases spanning DeFi lending, asset tokenization, and B2B settlements, as covered by Cointelegraph.

The bank's institutional partnerships further solidify its position. Collaborations with ABN AMRO, BBVA, and Commerzbank, as outlined on ODDO BHF, position ODDO BHF as a key player in a European stablecoin ecosystem. By leveraging its €150 billion asset base, the bank can offer liquidity and trust, critical factors for institutional adoption. As noted by a report from Crypto Times, "EUROD's alignment with MiCA and its institutional-grade infrastructure make it a compelling option for firms seeking euro-based on-chain solutions" - a view echoed in media coverage.

Financial Inclusion: A Digital Euro for the Unbanked?

While the EU's financial exclusion rates are relatively low, the ECB's digital euro initiatives highlight opportunities for broader inclusion. The ECB press release on its innovation platform has explored features like conditional payments and e-receipts to simplify transactions for low-income and digitally disadvantaged groups. EUROD, though not a central bank digital currency (CBDC), complements these efforts by providing a programmable, stable digital euro for everyday use.

For example, in rural areas with limited banking access, EUROD could facilitate microtransactions and B2B settlements without reliance on traditional banks. A ResearchGate study notes that digital payments are a key indicator of financial inclusion in Euro Area countries. By enabling low-cost, instant transfers, EUROD could empower small businesses and unbanked populations, particularly in emerging European markets. However, challenges remain: the EU lacks a unified monetary authority to drive adoption, and digital literacy gaps persist, according to ODDO BHF.

Challenges and Risks

Despite its strengths, EUROD faces headwinds. The U.S. dollar's dominance in stablecoins (99.85% market share) means euro-backed alternatives must overcome inertia and regulatory fragmentation, the State of European Stablecoins report warns. Additionally, third-party audits for EUROD's reserves are not yet publicly detailed, unlike competitors like EURS (audited by BDO Malta) and EURØP (audited by KPMG). Competitors' audit details are documented on Schuman reserve audits. While ODDO BHF's MiCA compliance is a trust signal, transparency in reserve verification will be critical for long-term credibility.

Conclusion: A Disruptive Force in European Finance

EUROD represents more than a stablecoin-it is a strategic play to redefine the Eurozone's digital financial landscape. By combining ODDO BHF's institutional strength with blockchain innovation, the stablecoin is well-positioned to attract institutional adoption and support financial inclusion. As the ECB and EU regulators continue to refine the digital euro's role, EUROD's success will depend on its ability to scale use cases, maintain transparency, and outcompete USD-backed stablecoins in a fragmented market.