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European policymakers are intensifying efforts to advance a digital euro after the United States approved sweeping legislation regulating the fast-growing stablecoin sector.
The move in Washington has heightened concerns in Brussels about the euro’s long-term competitiveness against dollar-backed tokens, The Financial Times reported on Friday.
The new US law, known as the Genius Act, establishes a clear framework for the $288 billion stablecoin market, which remains heavily dollar-dominated.
Following its passage, people close to the talks say EU officials are revisiting design choices for a potential digital euro, even debating whether to build it on a public blockchain such as Ethereum ETH/USD or Solana SOL/USD rather than keeping it restricted to private infrastructure.
The European Central Bank (ECB) has been exploring a digital euro for several years, pitching it as a way to provide citizens with secure, central-bank-backed money as cash usage declines.
Advocates argue such a project would also reinforce the euro’s standing in global finance.
But the latest US legislation has injected fresh urgency, with some in Europe warning that dollar-denominated stablecoins could gain even greater traction if Europe moves too slowly.
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ECB board member Piero Cipollone previously cautioned that reliance on dollar-based tokens could drain euro deposits toward US institutions and amplify the dollar’s dominance in cross-border transactions.
He stressed that Europe “cannot afford to rely excessively on foreign payment solutions.”
So far, euro-pegged stablecoins remain modest in scale, with Circle’s version holding a market capitalization of around $225 million, tiny compared to Tether and Circle’s dollar stablecoins.
A state-issued digital euro, officials argue, would signal a firmer commitment to digital assets and offer an alternative to private sector tokens.
While a digital euro running on a public blockchain could enhance accessibility and circulation, officials remain cautious due to privacy implications since transactions on such networks are publicly visible.
Nonetheless, insiders say the option is “being taken far more seriously now” than before.
The ECB confirmed it is still weighing both centralized and decentralized technologies in its research process, with no final decision yet on the architecture of a future digital euro.
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