The European Union (EU) is rushing to accelerate its plans for a digital euro, spurred into action by the recent passage of the Genius Act in the United States—a landmark law establishing the first comprehensive regulatory framework for the $288 billion stablecoin market, which is overwhelmingly dominated by the U.S. dollar. According to Coin68 and Reuters, the move has set off alarm bells in Brussels, with policymakers fearing that the growing popularity of dollar-backed stablecoins could erode the euro’s global standing and threaten the continent’s financial sovereignty.
For years, the European Central Bank (ECB) has quietly explored the possibility of issuing a digital version of the euro. But the urgency has changed. As the U.S. Congress greenlights a regulatory environment that paves the way for Wall Street titans like JPMorgan and Citi to enter the stablecoin arena, European officials are now scrambling to ensure the euro doesn’t fall behind in the race for digital currency dominance.
The stakes are high. As Financial Times reports, the EU’s core concern is clear: protect the euro from becoming a secondary player in the world of cross-border payments, and prevent capital outflows to the U.S. that would only deepen the continent’s reliance on the so-called “greenback.” The Genius Act, described as a “historic turning point” for stablecoins, has prompted what one EU official called “discussions we’ve never had before.”
“The U.S. government’s push for dollar-backed stablecoins raises concerns for Europe’s financial stability and strategic autonomy,” warned Piero Cipollone, a member of the ECB’s Executive Board, in April 2025. “This could lead to euro deposits shifting to the U.S. and further cement the dollar’s role in cross-border payments.” It’s a warning echoed by policymakers across the continent, who see the digital euro as a necessary shield against the growing clout of U.S.-backed digital tokens.
The digital euro project, however, faces a critical technological crossroads. According to Coin68, the ECB has been weighing two main options: a private, centralized network akin to China’s digital yuan (e-CNY), or a public blockchain such as Ethereum or Solana. Each path carries its own trade-offs. A private network would allow for tight control, but could struggle to scale beyond Europe’s borders. A public blockchain, on the other hand, would enable global transactions and increase transparency—but at the cost of exposing sensitive data, raising serious privacy concerns among EU officials.
The Genius Act’s passage has nudged the EU closer to considering public blockchain infrastructure, with sources telling Reuters that “the use of public blockchain is certainly being taken more seriously now.” Yet, as another source pointed out, a private digital euro “would look more like what China’s central bank is doing, rather than what private companies in the U.S. are doing.” The ECB itself has confirmed that it is still evaluating “various technologies—both centralized and decentralized—including Distributed Ledger Technologies (DLT),” and that no final decision has been made.
Currently, euro-backed stablecoins are a drop in the ocean compared to their dollar counterparts. The largest euro stablecoin, issued by Circle, has a market capitalization of about $225 million—dwarfed by the tens of billions held in USDC and USDT, the dominant USD-backed stablecoins. If the digital euro were to launch on a public blockchain, it could circulate far beyond the eurozone, boosting its competitiveness in global finance. But as Reuters notes, the prospect of all transactions being public is giving European officials pause.
The pressure isn’t just coming from across the Atlantic. China has already rolled out its e-CNY widely, and the UK is actively exploring a digital pound—nicknamed “Britcoin.” Meanwhile, the U.S., despite resisting a central bank digital currency (CBDC) of its own, is moving full speed ahead with legalizing and promoting dollar-backed stablecoins. As a result, the EU finds itself squeezed on all sides, unable to afford delay if it hopes to remain a major player in the future of money.
Supporters of the digital euro, such as ECB officials and many in the fintech sector, argue that a central bank-backed digital currency would make payments more accessible as cash usage declines. It would also reinforce the euro’s role in international trade and finance. “Europe cannot depend too heavily on foreign payment solutions,” Cipollone stated in April, underscoring the strategic imperative for the continent to chart its own digital path.
Yet, the technical debate remains unresolved. Should the digital euro be free to use across the eurozone, as the ECB envisions, or should it prioritize privacy and security, even at the expense of global reach? Public blockchains offer unparalleled transparency and the potential for worldwide circulation, but they also make every transaction visible—anathema to those worried about data protection. Private networks, while more secure, may lack the openness and interoperability needed to compete with the sprawling ecosystem of dollar-backed stablecoins.
Adding to the complexity, major U.S. crypto companies like Circle and Tether continue to expand their USD-backed stablecoin offerings, while banking giants like Citi and JPMorgan are reportedly eyeing their own entries into the market. These developments only heighten the urgency for Europe to act decisively, lest it find itself outflanked both technologically and geopolitically.
According to Coin68, the choice of technology for the digital euro will shape Europe’s financial and geopolitical position for the next decade. If the EU opts for a public blockchain, the digital euro could become a truly global currency—challenging the dominance of the dollar in international settlements. But the path forward is fraught with difficult trade-offs, and the final decision remains up in the air.
In the meantime, European officials are engaged in a delicate balancing act: racing to innovate, while safeguarding privacy and security for their citizens. The outcome will not only determine the future of the euro, but could also redefine the very architecture of international finance.
With the world watching, the EU’s digital euro project stands at a crossroads—caught between the promise of technological innovation and the hard realities of global competition.