The European Central Bank (ECB) is becoming less strict about euro-pegged stablecoins because it sees them as a way to help Europe keep its monetary independence. In a blog post on July 28, 2025, ECB consultant Jürgen Schaaf discussed the dangers of U.S. dollar-backed stablecoins taking over global markets, which might make it harder for the ECB to oversee monetary conditions.
The ECB called euro-based stablecoins illiquid and hazardous in 2022. Still, Schaaf today says that well-designed stablecoins with strong risk mitigation might answer real market needs and make the euro more important on the world stage.
The GENIUS Act Moves the U.S. Forward
The GENIUS Act, which was passed in July 2025, is a big step towards regulating and promoting dollar-backed stablecoins in the U.S. This law sets up a federal system for stablecoins. Schaaf said it is “more lenient” than Europe’s Markets in Crypto-Assets (MiCA) rules.
The Act’s goal is to make the dollar the most important currency in the world. Some estimates say that the stablecoin market might increase from $230 billion in 2025 to $2 trillion by 2028. Visa and Mastercard, two of the biggest firms in the U.S., already use dollar-backed stablecoins, strengthening rivalry with euro-based instruments in cross-border transactions.
Risks to European Monetary Sovereignty
The ECB says that if many people in the euro region started using dollar-based stablecoins for payments, deposits, or settlements, it may make its monetary policy less effective. The difference is clear when you look at the market caps of dollar-pegged stablecoins like Tether and USDC, which are at $267.8 billion, and euro stablecoins, which are worth only $487 million.
Schaaf said Europe may have to borrow more money and rely on the U.S. for geopolitical reasons if it doesn’t make a plan. This is because dollar stablecoins give the U.S. economic and strategic advantages.
The Digital Euro and Private Stablecoins Work Together
The ECB currently thinks that its digital euro initiative and private-sector stablecoins are two parts of a bigger plan for digital payments in Europe.
Even if the digital euro plan has been delayed by legislation, the ECB is pushing for the creation of euro-based stablecoins and the use of distributed ledger technology to make cross-border payments faster and easier. Schaaf also said that there needs to be better worldwide cooperation on regulating stablecoins to eliminate volatility and regulatory arbitrage.
The Global Stablecoin Scene
The market for stablecoins around the world is growing quickly, and dollar-backed tokens are at the top of the list. BlackRock’s recent study called attention to the GENIUS Act as a turning point and stressed that stablecoins should be used as payment mechanisms instead of investments.
At the same time, China is looking at yuan-pegged stablecoins to fight U.S. supremacy. This indicates that there is a worldwide competition to use stablecoins to manage financial stability. Europe’s shift in perspective demonstrates its pragmatic approach to striking a balance between innovation and monetary sovereignty in this evolving global landscape.
