Europe’s effort to carve out digital monetary sovereignty is encountering an uncomfortable paradox: stablecoin adoption across the continent is accelerating - but users overwhelmingly continue to favor USD-backed stablecoins.
According to recent figures, 99.8% of the global stablecoin supply remains tied to the U.S. dollar. This heavy reliance poses a growing threat to the euro’s influence in digital finance, even as the EU rolls out landmark regulations designed to empower euro-backed alternatives.
In the second half of 2025, stablecoin transaction volume in the European Union reached new highs, with the region now second only to the United States. But despite the volume, USD-based stablecoins such as USDT and USDC dominate EU usage.
The recent rollout of the Markets in Crypto-Assets (MiCA) framework was supposed to change that — providing clear legal pathways for euro-backed stablecoin issuers and reducing dependence on U.S. regulatory infrastructure.
So far, the impact has been underwhelming.
Stablecoin Growth Undermines Euro Ambitions
According to data from CryptoRank, North American stablecoin transactions rose 42% from 2024 to 2025. European stablecoin usage jumped from 16% to 34% in the same period — a significant gain, but not enough to shift the global balance away from dollar-backed assets.
“Europe has the tools now,” said Alexander Hoeptner, CEO of AllUnity, the first euro-backed stablecoin issuer in Germany. “But there is still no widespread incentive structure to get people to choose EUR over USD in practice.”
This heavy preference for the dollar reflects historical trends. The dollar’s liquidity, global reach, and long-standing dominance in global trade have made it the default stablecoin base for years.
Even in a regulated European environment, users lean toward the most liquid and widely accepted assets — a reality that’s been hard to overcome.
MiCA: The Right Rules, but Not Enough Urgency
MiCA was introduced in December 2024 to provide a harmonized legal framework for crypto assets, including stablecoins, across all 27 EU member states.
The regulation establishes capital requirements, redemption rights, and transparency rules for so-called "asset-referenced tokens" — a category that includes euro-backed stablecoins.
MiCA has succeeded in making stablecoin issuance safer and more transparent, but it hasn’t yet changed user behavior.
“Regulation is necessary but not sufficient,” said Hoeptner. “We need complementary policies that promote EUR-based digital assets. Otherwise, users will keep defaulting to what’s familiar.”
Despite MiCA, the euro remains marginalized in stablecoin markets. According to on-chain data, the share of euro-backed stablecoins in circulation is less than 0.2% of total supply.
Political Stakes: Financial Sovereignty at Risk
For EU policymakers, this isn’t just about market share — it’s about sovereignty.
Reliance on USD-denominated stablecoins means the European financial system is exposed to U.S. regulation and political risk. In times of geopolitical tension or economic divergence, this exposure could prove dangerous.
“Depending on the U.S. regulatory environment for key financial infrastructure is not a strategic choice,” said Hoeptner. “It’s a vulnerability.”
In June, European Commissioner Mairead McGuinness reaffirmed that euro-denominated digital assets are essential for reducing strategic dependence on non-EU infrastructure. Still, adoption remains low.
Euro Stablecoins as a Bridge to the Digital Euro
One possible path forward is closer integration between private euro-backed stablecoins and the forthcoming digital euro, the European Central Bank’s central bank digital currency (CBDC) initiative.
The digital euro is currently undergoing phased testing and could launch as early as 2026. While its goals include financial inclusion and payment efficiency, it also represents a geopolitical bid to safeguard monetary sovereignty in an increasingly digital world.
In this context, euro-backed stablecoins could serve as a complementary instrument — offering programmability, DeFi integration, and other innovations that may fall outside the ECB’s scope.
“This wouldn’t be a competition between public and private forms of money,” said Hoeptner. “It would be a partnership, where each can do what it does best.”
Resistance from Traditional Finance
Yet Europe’s banks and legacy financial institutions have been slow to embrace stablecoin innovation. Cultural conservatism, regulatory uncertainty, and a general lack of familiarity with blockchain infrastructure have made many institutions wary of participating.
“The biggest risk to European finance is not regulatory confusion — it’s inertia,” said Hoeptner. “If the traditional sector doesn’t adapt, the market will evolve without them, and control will shift abroad.”
European banks may also fear disintermediation, as stablecoins allow users to transact peer-to-peer without requiring bank deposits or custodial accounts.
Still, some players are testing the waters. Société Générale issued a euro-backed stablecoin on Ethereum in 2023, and AllUnity is working to provide enterprise-grade stablecoin infrastructure regulated under BaFin, Germany’s top financial watchdog.
Final thoughts
For the euro to carve out a competitive role in digital finance, a multi-pronged strategy is needed:
- Adoption Incentives: European institutions must develop incentives to encourage euro-stablecoin usage across exchanges, wallets, and payment rails.
- Regulatory Cooperation: Regulators must continue aligning MiCA with traditional financial oversight to foster adoption among banks and corporates.
- CBDC-Stablecoin Synergy: The digital euro and euro-backed stablecoins must be designed to complement, not compete with, each other.
- Public-Private Partnerships: EU authorities should explore collaborations with regulated stablecoin issuers to build robust, sovereign alternatives to dollar-dominated systems.
Europe’s stablecoin market is growing fast, but not in the direction many had hoped. With USD-backed assets still accounting for 99.8% of the market, the euro’s digital foothold remains weak — even as MiCA lays the foundation for change.