Central Banks, Parliaments, and Atlantic Players at the Euro Stablecoin Table

Over the past year, the market for euro stablecoins has doubled, yet it still only represents a fraction of the dollar's value.

Written by: Blockchain Knight

On July 1, 2026, the transitional period for the EU's MiCA regulation CASP officially ends. Immediately, payment infrastructure company Decta released a report that announced a seemingly exciting fact with a set of numbers:

In the past year, the market value of euro stablecoins compliant with MiCA standards grew by 128%, soaring from $295.6 million to $673.9 million. Trading volume increased by 43.1%, and the number of active coins rose from 5 to 8.

However, the same report also mentioned another number—these 8 active euro stablecoins together account for only 0.22% of the market value of dollar stablecoins. How large is the pool of dollar stablecoins? CoinGecko data shows it to be around $300 billion.

$673.9 million vs $300 billion. This is not a race; it’s a story about decimal points.

MiCA: A Moat or a Self-Built Wall?

To understand the awkwardness of this 0.22%, we need to clarify what MiCA has done for stablecoins.

MiCA, short for the Markets in Crypto-Assets Regulation, is the world's first comprehensive regulatory framework for crypto assets, developed by the EU over nearly four years. It sets strict entry requirements for stablecoins:

• Issuers must hold sufficient liquidity reserves;
• Must obtain an electronic money license within the EU;
• Must meet a series of requirements for information disclosure, governance, and consumer protection.

Among these, the most critical and controversial provision is: issuers are prohibited from paying interest to holders.

On April 27 of this year, the European Blockchain Association, along with former ECB Director General of Payment Infrastructure Ulrich Bindseil, released a report titled "Reforming MiCA to Promote Euro Stablecoins." The core argument of the report can be summarized by an economic concept—the "Laffer Curve."

The Laffer Curve tells us that higher tax rates are not always better; beyond a certain critical point, tax revenue can actually decline. Blockchain for Europe believes that MiCA's stablecoin rules have crossed a similar critical point: while security has indeed improved, commercial attractiveness has been killed.

The logic is simple: when a US-issued dollar stablecoin (like USDT or USDC) can earn 4-5% returns by investing reserves in US Treasury bonds, while a euro stablecoin issuer is prohibited by MiCA from sharing any earnings with users, what choice will rational market participants make?

The answer is obvious.

The $673.9 Million "Ingredient List": Who is Supporting the Scene?

Among the 8 active euro stablecoins tracked by the Decta report, Circle's EURC leads with a market value of approximately $430.4 million, accounting for 64% of the total market value. In second place is EURCV issued by SG-FORGE, a subsidiary of Société Générale, with a market value of about $137.8 million, a year-on-year increase of 180.6%.

In other words, the narrative of the "rise of euro stablecoins" is actually a duet between one American company (Circle) and one traditional French bank. The remaining 6 coins together may not even share $100 million.

What’s even more intriguing is that Circle, as the issuer of EURC, is also the issuer of USDC, which has a market value exceeding $35 billion. This means that the euro stablecoin issued by Circle has a market value only 1.2% of its dollar stablecoin.

For Circle, EURC is more like a compliance ticket, a gesture to show European regulators: look, I am also contributing to the euro ecosystem. But the real profit center has always been across the Atlantic.

Société Générale, through SG-FORGE, issues EURCV more as a strategic positioning. This is a traditional financial giant testing the boundaries of the on-chain world in the safest way—

It is deployed on Ethereum, Solana, XRP Ledger, and Stellar, but its target customers remain institutions and wholesale settlement markets, far from the DeFi wallets of ordinary users.

European Central Bank: Why Say No to "Self-Rescue Plans"?

In May of this year, the Bruegel Institute submitted a policy document to the informal meeting of EU finance ministers and central bank governors, titled "A New Strategy to Mitigate Risks of EU Stablecoins," authored by Bruegel Director Jeromin Zettelmeyer.

The core argument of this document hits the nail on the head: the EU's current strategy of favoring bank-issued tokenized deposits while suppressing private stablecoins is backfiring. It is not protecting the euro—rather, it is pushing demand towards dollar stablecoins.

Bruegel calls this "infrastructure dollarization": when dollar stablecoins become the de facto standard for on-chain settlements, trading activities will drain from the euro system's infrastructure, and the euro's core operational position in digital finance will be quietly eroded.

More dangerously, a large number of European users holding dollar stablecoins means they are inadvertently bearing the exchange rate and fiscal risks of the US. In response, Bruegel proposed four reform suggestions:

• Relax MiCA requirements for issuers to deposit 30%-60% of reserves in bank deposits;
• Allow issuers to pay interest to holders (but below the ECB policy rate and deposit rate);
• Allow EU-regulated stablecoin issuers to access the ECB's balance sheet and enjoy lender of last resort facilities;
• Accelerate the ECB's Appia project to ensure interoperability between DLT platforms and euro system payment infrastructure.

However, at the informal meeting in Nicosia on May 22-23, the ECB President Christine Lagarde's team outright rejected these proposals. The ECB's opposition logic has three points:

First, the risk of bank disintermediation

If stablecoin issuers can withdraw deposits from banks on a large scale, banks' financing costs will rise, and their ability to extend credit will decline. For a European economy that relies on bank credit transmission, this is no small matter.

Second, complicating monetary policy transmission

When a large amount of funds flows from bank deposits to stablecoins, the traditional path for the ECB to influence the real economy through interest rate adjustments will be disrupted, potentially diminishing the effectiveness of interest rate decisions.

Third, crossing roles

The lender of last resort mechanism is a privilege reserved for regulated banks. Extending this safety net to non-bank stablecoin issuers? The ECB believes this crosses the line.

The ECB's alternative proposal is to promote central bank-led projects like Pontes and Appia, using tokenized commercial bank deposits—rather than private stablecoins—as the "pipeline system" for European on-chain finance.

In plain terms: you want me to help you raise something that might bite me back? Sorry, I’ll handle it myself.

The Currency Sovereignty Struggle Behind Market Share

After reviewing the data comparison above, you might think this is a story about commercial competition for market share in the crypto market. But in reality, it is a defensive battle over currency sovereignty.

Dollar stablecoins USDT and USDC have become the de facto "reserve currency" in the on-chain world. In DeFi protocols, dollar stablecoins are used for staking, for cross-border payments, and even many residents of emerging market countries are using dollar stablecoins to replace their local currencies for savings.

The GENIUS Act passed in the US in 2025 further solidified this trend. It provides a clear legal status for dollar stablecoins while not prohibiting interest payments—this means that dollar stablecoin issuers can share a portion of Treasury bond earnings with users, while euro stablecoin issuers cannot do this under the MiCA framework.

This creates a paradox: MiCA was intended to protect the European financial system and consumers. However, its strict rules objectively push issuers and users towards dollar stablecoins. The growth of dollar stablecoins, in turn, erodes the digital territory of the euro.

Bruegel has recognized this cycle, which is why it calls for the ECB to "intervene in the game."

But the ECB sees another cycle: if rules are relaxed to allow private stablecoins to inflate, in the event of a run (stablecoins are not bank deposits and are not protected by deposit insurance), who will clean up the mess?

If the central bank is forced to provide liquidity support for private stablecoins, how is that different from bailing out "too big to fail" banks during the financial crisis?

Conclusion

Returning to the beginning of the article, the 128% growth is real, but $673.9 million is also real. The overlap of these two numbers does not depict a story of "rise" but rather a picture of "growing in the cracks."

MiCA has established the world's most comprehensive regulatory framework for crypto assets, which is indisputable. Europe leads in the "quality" of regulation. However, in this specific arena of stablecoins, there is a significant gap between quality and scale.

Meanwhile, on July 7, the European Parliament passed a report titled "Digital Assets—Challenges to the Competitiveness and Integrity of the EU Financial System," calling on the European Commission to assess whether areas not yet covered by MiCA, such as DeFi, crypto lending, and staking, should be included in regulation.

The European Commission has also initiated targeted consultations on the operational effectiveness of MiCA, with the question of whether the interest prohibition should be re-examined clearly listed as a topic.

Safety, competitiveness, currency sovereignty—when these three goals are simultaneously presented to European decision-makers, the prioritization of each will push euro stablecoins towards entirely different futures.

The answer to this game is not in Decta's report but in the policy direction over the next 12 months.