Stablecoins: Europe’s Great Challenge

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The year 2025 marked a turning point for cryptocurrencies, driven largely by the new U.S. GENIUS Act. This legislation sparked a global media frenzy. However, a recent report by the experts at Stablewatch has dampened this excitement with a stark conclusion: the U.S. Dollar remains the undisputed king.

What is a stablecoin?

To understand stablecoins, we first need to look at Bitcoin. The problem with Bitcoin is its volatility, its price changes constantly. You can win big, but you can also lose everything in a single day.

This is where the stablecoin comes in. It is a cryptocurrency designed to remain stable. To achieve this feat, there are three main methods:

  • The centralized model: The issuing company holds actual currency in a vault or bank account to back the value of each digital token.

  • The decentralized model: The guarantee isn’t in dollars, but in other cryptocurrencies locked within the computer system.

  • The algorithmic model: There are no physical reserves. A computer program automatically manages supply and demand to maintain the price.

Today, stablecoins make up 8% of the entire cryptocurrency market.

The main problem : Total dependence on the United States

While this technology is promising, it poses a huge political problem. Currently, 99% of the global value of stablecoins is pegged to the U.S. Dollar. Furthermore, the companies issuing them are almost all located outside the European Union. For Europeans, this represents a double loss of control, and therefore sovereignty:

  • We depend on a private company, often American.

  • We depend on a foreign currency (the Dollar) instead of the Euro.

The real risk : Can we really trust this currency?

The advantage of a stablecoin is that it can be exchanged instantly online, yet it is supposed to hold the same value as real currency. In theory, you can swap your token for a real dollar at any time. But for this to work, the company must actually hold the reserves it claims to have. And this isn’t always the case.

The Staver example is a good illustration. In 2021, this company was fined $41 million in the U.S. for lying about its actual reserves.

This highlights the main risk: a bank run. If users panic and try to withdraw their money all at once, and the company lacks sufficient reserves, the whole system collapses. Unlike traditional banks, there is no Central Bank here to step in and reimburse customers. In response, Europe and the U.S. are now imposing stricter monthly audits.

Why Europe must seize this opportunity

The technology behind these currencies is revolutionary because it makes international payments faster and cheaper. Europe cannot leave the field open to the Dollar. To strengthen the Euro in this area, it must build on its three main strengths.

  • Regulation: Europe has been a pioneer with the MiCA regulation. This set of laws protects users and businesses. Unlike U.S. laws like the GENIUS Act, which are sometimes considered too lax on security, the European framework allows for safe innovation.
  • The Digital Euro: The European Central Bank (ECB) is preparing its own digital version of the Euro. It will offer universal legal tender status, enhanced privacy, and a sovereign infrastructure as a credible alternative to tech giants. It will be crucial for banks to exchange billions between themselves.
  • The Private Sector: Finally, Europe is encouraging its private banks to create their own tokens. The idea is to combine the security of public money with the agility of the private sector to offer modern, 100% European payment methods.

Conclusion

In short, stablecoins are not just a technological trend, but a profound shift in global finance. While the dollar dominates the market today, Europe must refuse to remain a bystander. With its protective regulations and the development of the digital euro, it is laying the foundations for a safe and sovereign alternative. The challenge of the coming years will be crucial: transforming these legal and technical frameworks into concrete usage, so that Europe does not just endure the future of money, but helps write it.

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