Crypto News: U.S. Stablecoin Law Spurs EU to Accelerate Digital Euro Plans, Says Financial Times

The recent passage of the U.S. GENIUS Act, a comprehensive regulatory framework for the $288 billion stablecoin market dominated by dollar-pegged tokens like Tether’s USDT and Circle’s USDC, has jolted European policymakers into rethinking their digital euro strategy. According to a report by the Financial Times, this U.S. legislative move has intensified pressure on the European Union to speed up its efforts to launch a central bank digital currency (CBDC) amid growing concerns over America’s increasing influence on cross-border payments. Key Takeaways- The GENIUS Act caught many in Europe by surprise, sparking fears that dollar-backed stablecoins could further entrench the U.S. dollar’s dominance in global payments.- European officials are now considering whether to deploy the digital euro on public blockchains such as Ethereum or Solana, a significant shift from the previously favored private, centrally controlled infrastructure.- The European Central Bank (ECB) has been studying the digital euro for years, aiming to provide a public alternative to private payment systems as cash usage declines.- The U.S. stablecoin law has accelerated discussions in the EU, with some policymakers advocating for a more decentralized approach to help the euro compete globally with dollar-based digital assets.- The ECB confirmed it is still evaluating both centralized and decentralized technologies, keeping open the possibility of a blockchain-powered digital euro.- With China piloting its digital yuan and the U.K. exploring a digital pound, Europe faces mounting pressure to maintain the euro’s relevance in the rapidly digitizing financial landscape.- Existing euro-backed stablecoins like Circle’s EURC exist but lack the authoritative weight of a central bank-issued digital currency.Why This MattersThe U.S. GENIUS Act establishes a clear regulatory framework for stablecoins, potentially solidifying the dominance of dollar-pegged digital assets in global finance. This development has raised alarms in Europe, where policymakers worry that without a swift and robust digital euro rollout, the eurozone could lose ground in the evolving digital payments ecosystem.The shift toward considering public blockchain platforms for the digital euro marks a notable change in strategy. Previously, the ECB favored private, centralized systems citing privacy and security concerns. However, the need to compete with decentralized dollar-backed stablecoins and other CBDCs worldwide is prompting a reevaluation. The Road Ahead for the Digital Euro- Technology Choice: The debate continues between centralized versus decentralized infrastructure, with public blockchains gaining traction.- Policy and Regulation: The EU aims to balance innovation with privacy, security, and regulatory compliance.- Global Competition: The digital euro must contend with the digital yuan, digital pound, and dominant dollar-backed stablecoins.- Market Impact: A successful digital euro could help retain euro deposits within the EU and reduce reliance on dollar-denominated assets abroad.The U.S. stablecoin legislation has acted as a catalyst for the European Union to accelerate its digital euro plans. As the ECB evaluates technological options and policymakers debate the best path forward, the digital euro’s design and deployment will be critical in shaping the future of cross-border payments and the euro’s role in the global digital economy.