The largest euro-denominated stablecoin in circulation is issued by a company based in the United States, a situation that European regulators and policymakers say exposes a gap in the region’s digital currency infrastructure. The revelation has prompted calls for stronger oversight and faster development of homegrown alternatives.
Why the stablecoin matters
Stablecoins are cryptocurrencies pegged to a fiat currency, like the euro, and are used for trading, payments, and cross-border transfers. The biggest such token for the euro, by market cap, is managed by a US firm — not a European one. That means the stability and integrity of a key piece of the euro zone’s digital payments toolkit depends on a foreign entity’s compliance with US regulations and business practices.
European Central Bank officials and some national finance ministries have flagged the arrangement as a potential vulnerability. If the US issuer were to face a regulatory crackdown, insolvency, or simply decide to suspend operations, the euro-denominated stablecoin market could freeze overnight. No European authority has direct oversight of the issuer.
Calls for a digital euro — and tougher rules
In response, the European Commission and the ECB have accelerated work on a central bank digital currency — the digital euro — which would give the region its own state-backed digital payment instrument. But that project remains years from a full rollout. In the meantime, policymakers are pressing for the Markets in Crypto-Assets regulation to be applied more aggressively to foreign stablecoin issuers operating in Europe.
“We cannot have a core part of our financial plumbing controlled from outside the union,” one EU official involved in digital finance policy said earlier this month. Under MiCA, which took effect in stages last year, stablecoin issuers must be based in the EU and hold sufficient reserves. The largest EUR stablecoin’s US base puts it outside that framework, though it still serves European users.
What the US issuer says
The company behind the stablecoin has not commented on the calls for tighter European oversight. It has previously stated that it complies with all applicable laws in the jurisdictions where it operates. But European regulators argue that “applicable laws” are not enough when the issuer is not accountable to local authorities.
Next steps
The European Banking Authority is expected to issue additional guidance by mid-2025 on how foreign stablecoin issuers must register or limit access to EU customers. Separately, the ECB plans to release a detailed timeline for the digital euro pilot program in the fourth quarter. Whether either move will shift the euro stablecoin market away from US dominance — or merely formalize the current arrangement — remains an open question.
