Stablecoins are gaining popularity in Europe; however, users still favor dollar-linked assets. This growth raises concerns regarding the digital sovereignty of the euro.
Stablecoin Usage Growth in Europe
In 2025, stablecoin transaction volume in the European Union reached new heights. However, 99.8% of the stablecoin supply remains tied to the US dollar. This increasing influence of the dollar jeopardizes the euro's competitiveness in the digital asset market, with euro-backed stablecoin usage rising from 16% to 34%, but still dominated by dollar assets.
Impact of MiCA Regulation
The MiCA framework was introduced in December 2024 to create a harmonized legal structure for crypto assets, including stablecoins, across all 27 EU member states. While MiCA has made stablecoin issuance safer and more transparent, its impact on changing user behavior has been limited. As noted by Alexander Hoeptner, CEO of AllUnity, 'Regulation is necessary but not sufficient.'
Risks and Pathways to Digital Euro
The hope to reduce reliance on dollar assets may hinge on closer integration between private euro-backed stablecoins and the forthcoming digital euro. The strategic risks associated with dependence on USD-backed stablecoins highlight the need for strengthening the euro as an alternative. 'Depending on the U.S. regulatory environment for key financial infrastructure is not a strategic choice,' asserts Hoeptner.
For the euro to successfully carve out a position in the digital finance space, a multifaceted strategy is required, involving incentives for euro-backed stablecoin adoption and cooperation between regulators and financial institutions.
