Introduction of Euro-Pegged Stablecoin
A consortium of ten European banks has set its sights on launching a euro-pegged stablecoin by 2026, operating under the oversight of the Dutch Central Bank. According to an announcement from BNP Paribas made on Tuesday, they are collaborating with nine other banks across the EU to create a stablecoin that aligns with the forthcoming Markets in Crypto-Assets (MiCA) regulations, pending necessary regulatory approvals.
Implications of the Initiative
Jan-Oliver Sell, CEO of the Amsterdam-based entity known as Qivalis, emphasized the broader implications of this initiative, stating:
“The introduction of a euro-centric stablecoin represents more than mere convenience; it symbolizes a crucial step towards achieving monetary independence in a digital landscape. This development is poised to open up new avenues for European businesses and consumers to engage with on-chain payments and digital asset ecosystems using their local currency.”
Context and Regulatory Landscape
This initiative to develop a euro-backed stablecoin arrives as U.S. regulators gear up to implement legislation aimed at regulating payment stablecoins, notably the GENIUS Act, which was enacted by President Trump in July. Meanwhile, concerns have been raised about the potential implications for monetary policy as stablecoin markets expand. Dutch Central Bank Governor Olaf Sleijpen has reportedly highlighted these risks, while a recent European Central Bank (ECB) report noted that the threats posed by stablecoins, though largely manageable, warrant vigilant observation.
Current Market Status
As of November, the market capitalization of euro-denominated stablecoins stood at less than €350 million (approximately $407 million), accounting for less than 1% of the global stablecoin market as reported in July.
Recent Developments
In a related development, Tether, a prominent stablecoin issuer, recently ceased redemptions for its euro-pegged stablecoin, EURt, after a year of announcing it would withdraw support. The company attributed this decision to the implications of the EU’s MiCA regulations, stating that these regulations posed significant risks for stablecoin operations.
