Europe’s digital payments push: Consortium of EU banks launch euro-based stablecoin

A consortium of 11 major European banks recently announced their plan to develop and launch a euro-denominated stablecoin. This announcement follows a growing push for greater digital payment autonomy in Europe, as US market dominance grows amid support from the Trump administration.

This collaboration showcases Europe’s determination to create an alternative to the US-dominated stablecoin market and contribute to the region’s digital payments landscape. European banks are afraid of losing market share, thereby losing their grip on payment transactions. They fear that US-based stablecoins will soon be widely used in Europe instead of euros, reducing reliance on US-based stablecoins.

In this blog we will dive into the present stablecoin markets, the plans of the EU consortium stablecoin project, their main goals and what it my bring, what are the challenges, but also how it conflicts with the existing Digital Euro project and what that may mean for ECB’s project.

What are stablecoins?

But first to refresh your mind: what are stablecoins? Stablecoins are a type of cryptocurrency that maintain a constant value. They are designed to provide users with greater price stability by pegging to fixed value, like a fiat currency — such as the dollar or euro — or commodity, making them more stable than other cryptocurrencies. This contrasts with bitcoin or ether, for example, which can often experience sharp moves in valuations. Stablecoins are a new trend in financial markets and are becoming increasingly common.

Present Stablecoin markets

The use of stablecoins – designed to maintain a constant value and backed by traditional currencies – has exploded in recent years, notably among crypto traders moving funds to and from more volatile tokens. But they are increasingly used in mainstream digital payments and cross-border transactions. Currently, nearly $300 billion is circulating globally in the form of stablecoins.

US dominance on the stablecoin markets

This summer, a stablecoin law - the Genius Act)- was passed in the US, legalizing the market there. The US government is pleased with this because it boosts demand for US government bonds. And because it gives power if the 'cryptodollars' are dominant in the digital financial universe.

The USD-denominated stablecoin market is exploding now that they have been legitimized via the Genius Act, and many leading U.S. banks are working on their own versions.

Currently, the US is already in a hegemonic position in the stablecoins sector. The value of the vast majority of existing stablecoins is pegged to the US dollar. US stablecoins dominate the global market, accounting for some 99% of total market capitalization, with Circle (USDT) and Tether (USDC) dominating the space. According to some forecasts, that amount will increase tenfold in the coming years.

EU stablecoin market

In Europe, there was hope that the European crypto law, the Markets in Crypto-Asset Regulation (MICA) that was launched in 2023 would stimulate euro-denominated stablecoins. That is indeed happening, but much slower than the rapid growth in the American market. Banks have long steered clear of the crypto world, seeing it as a threat.

Several euro-stablecoins already exist, but they are rarely used. While attempts have been made to launch a euro-denominated stablecoin — for example, Circle with its EURC – these haven’t garnered anywhere near the same interest as USD-denominated tokens.”

The EU market is still widely dominated by US Dollar-pegged crypto assets. USDC holds a significant portion of the stablecoin market in the region after Circle obtained the first US Dollar-pegged digital currency license under MiCA law last year.

Euro-denominated stable coins are tiny by comparison totalling only $ 620 million make up less than 1%, showing a clear gap the EU banks initiative wants to fill.

It’s reasonable to expect European banks to want a piece of this pie, and the profits that could come with it.

Launching a euro-denominated stablecoin

A consortium of nine leading European financial institutions collaborate to develop and launch a MICAR-compliant euro-denominated stablecoin. The consortium includes names like ING, UniCredit, Banca Sella, KBC, CaixaBank, DekaBank, Danske Bank, SEB, and Raiffeisen Bank International.

MICA: Regulatory Compliance 

The stablecoin will operate under the European Union’s MiCAR-framework, which aims to provide legal clarity and ensure that crypto assets and stablecoins are safe for market participants, ensuring robust regulatory oversight and consumer protection.

The regulatory framework is particularly important for European countries looking to create a unified and secure digital finance ecosystem. These MiCA regulations have already paved the way for several European issuers to enter the market. Ten issuers holding MiCA licenses as of early 2025.

New Dutch based company

To comply with MiCA regulations, the new euro-denominated stablecoin will be launched and managed by a Netherlands-based company formed by the consortium. This company will be licensed and supervised by the Dutch Central Bank as an e-money issuer that will oversee the stablecoin project. The new stablecoin company will be registered in the Netherlands. The group also expressed plans to appoint a CEO for the newly formed company anticipated in the near future, pending regulatory approval.

The new company will enhance governance and transparency while driving the stablecoin project forward, with an open invitation for additional banking partners to join the venture in the near future, creating a “new European standard”..

Future launch: Time schedule

Once all the paperwork is finalized, the consortium plans to launch their coin (the name is yet to be announced) through their existing banks and customer relationships.

The first issue of this euro-backed stablecoin is expected in the second half of 2026. This timeline aligns with the broader regulatory push in Europe to create a more transparent and reliable digital financial infrastructure. While the initiative is currently focused on the euro, the consortium is open to future collaborations with additional banks.

Goal: Creating trusted European digital payment system

The banks involved in the project aim to create a trusted European standard for digital payments in the digital ecosystem. The introduction of a fully compliant euro-dominated stablecoin through a collaboration of European banks aims to level the playing field, offering a more native option for users

By providing a fully regulated MICA-compliant stablecoin, the initiative aims to strengthen Europe's strategic autonomy in payments. One key goal of the stablecoin project is to provide Europe a genuine and competitive euro-alternative to the current US-dominated stablecoin market with their euro-pegged stablecoin,

The consortium’s collaboration under MiCA’s regulatory framework aims to accelerate blockchain adoption in traditional banking while addressing inefficiencies in cross-border payments and digital asset management. By collaborating, the banks hope to prevent every financial institution from registering its own stablecoin, which could lead to users being overwhelmed and institutions constantly having to switch between them.

"We believe this development requires an industry-wide approach, and it's imperative that banks adopt the same standards," Floris Lugt, Digital Assets lead at ING

What may it bring?

The project’s goal is to build a new euro denominated payment and financial market infrastructure, fully compliant with the EU’s MICA regulation, whereby digital payments are key.

The stablecoin will provide efficient, programmable, peer to peer based payment solutions for users globally. Participating banks will offer additional services such as stablecoin wallets and custody solutions tailored for their clients, to store and transact the euro stablecoin.

The stablecoin will leverage blockchain technology, offering vaster, lower cost payments and 24/7 instant cross currency settlement, thereby offering significant transparency and efficiency across financial markets.

The initiative is designed to support both Institutional and retail use, enhancing the overall accessibility and adoption of blockchain-based payment across Europe, offering significant efficiency and transparency. It aims to provide 24/7 access to efficient cross-border payments, programmable transactions, and improvements in supply chain management and digital asset settlement

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“This Technology can help resolve inefficiencies and cost burdens, benefiting both the financial sector and customers”, Floris Lugt, Digital Assets Lead at ING

Euro stablecoin project not without challenges

The euro stablecoin project project however is not without challenges. That especially relates to SMEs.

The euro stablecoin will be governed by the EU’s MiCA regulation. That means they have to look at strict capital, operational, and liability requirements for stablecoin issuers. For SMEs, that’s a lot to deal with. Not everyone has the resources to keep up.

MiCAR will be implemented differently in each EU member state. Different countries might interpret things differently and add non-EU regulations for good measure. This makes it comlicated for SMEs to use stablecoins across borders.

Regulators are worried about how stablecoins might interfere with monetary policy and create systemic risks. If company thinking about a stablecoin treasury for businesses, they will have to make sure it doesn’t create liquidity or operational problems.

There are also strict rules on consumer protection, AML, CFT, and data privacy under EU law. Aligning stablecoin use with those rules can be a full-time job, and many smaller businesses don’t have the manpower or expertise to manage that.

And finally, stablecoins come with their own set of risks like technical vulnerabilities and governance issues. If a company’s working with regulated banks or financial institutions, one need a solid risk management framework to handle these challenges.

Euro digital finance scene more competitive

Euro-denominated stablecoins could streamline cross-border payments within the Eurozone. This could attract fintech startups to Europe and might open doors for new crypto-friendly business banks, The euro stablecoin initiative could change the game for them. Traditional European banks are also getting into the stablecoin space.

These are however far behind US fintechs when it comes to stablecoin innovation. They’ll urgently need to shift from a compliance-first mindset to a user-focused approach. Making the digital finance scene more competitive.

ECB sceptical to this euro stablecoin plan

Meanwhile, the European Central Bank remains sceptical to this euro blockchain plan. ECB President Christine Lagarde in June told European policymakers that privately issued stablecoins posed risks for monetary policy and financial stability.

As a safer alternative, she has urged European lawmakers to introduce legislation backing the launch of the digital euro, a digital version of the EU's single currency. Following the enactment of the Genius Act in the US in July, the EU reportedly began accelerating its plans for a digital Euro, with expectations of a launch on the Ethereum or Solana blockchain.

The EU central bank’s control over monetary conditions in the region could be weakened by dollar stablecoins’ dominance, and therefore called for greater support for regulated euro stablecoins.

The digital euro is currently however not expected until 2029 at the earliest, according to ECB estimates. That is far too slow to compete with dollar-denominated digital assets, and banks are well aware of that.

Forward looking

This euro stablecoin initiative adds to the growing trend of European financial institutions exploring regulated stablecoins. European regulators are working to ensure that the EU remains competitive in the global digital finance market. This euro stablecoin marks a step forward in achieving that goal.

A more closely MICA-regulated product could help boost demand in the region among more risk-averse European investors and institutions, contributing to Europe's strategic autonomy in payments

“The consortium-led launch may expedite the roll out of a digital version of the euro””.

Plans by the consortium of European banks to launch a new stablecoin could draw the region’s crypto-averse investors into the digital assets environment — and potentially speed up efforts to roll out a digital version of the euro.