Stablecoin adoption is growing quickly across Europe, now closely following the United States. However, it is not experiencing the type of adoption it was looking for. Today, people throughout the region are primarily opting for USD-backed stablecoins instead of those backed by the euro.
As a result, the current dominant stablecoin poses a risk to Europe’s monetary sovereignty. In an interview with BeInCrypto, Alexander Hoeptner, CEO of AllUnity —the first euro-backed stablecoin issuer in Germany— explained that increasing demand for euro-backed stablecoins could help avoid a decline in the euro’s role in digital finance.
Europe’s Stablecoin Paradox
Stablecoin usage is picking up fast across the European Union, but it’s not the type of adoption most favorable for the region.
According to recent data from Crypto Rank, North American stablecoin transactions jumped nearly 42% from 2024 to 2025. Though the EU’s share stood at 34%, it represented a significant leap from 16% just the year before.
Despite this increase, 99.8% of the total stablecoin supply remains USD-based. The particular proliferation of USD-backed stablecoins is worrying European leaders, especially at a time when countries with the strongest fiat currency are looking to keep it that way.
MiCA’s Role in Shifting Europe’s Stablecoin Preferences
The United States dollar’s dominance in the global economy has made it the default asset for users worldwide, creating increased competition with other currencies like the euro, pound, and yen.
Before the introduction of the Markets in Crypto-Assets (MiCA) regulatory framework in December of last year, European users had little incentive to adopt euro-backed stablecoins. The widespread use of USD-backed stablecoins, driven by the dollar’s established role, offered users stability and liquidity.
Using them in this situation also means relying on the US regulatory system, which jeopardizes the euro’s international standing and makes it more vulnerable to American policymaking.
“The current US administration poses a risk of uncertainty to the stability of the US monetary system and the regulatory framework of the digital economy despite the passed GENIUS Act… widespread usage could form a negative dependence that could be exploited against EU interests,” Hoeptner told BeInCrypto.
However, with MiCA now in place, there’s a clearer motivation for European users to switch to euro-backed stablecoins as the region creates a more structured and regulated alternative to USD-backed assets.
What’s the Promise of Euro-Backed Stablecoins?
Euro-backed stablecoins offer a crucial alternative for European users to transact digitally without defaulting to USD.
They also provide an essential service by acting as a bridge currency for cross-border trade. Businesses and individuals can conduct more streamlined international transactions while reducing exposure to foreign currency risks.
“This would not expose the European users to regulatory uncertainty and secure also the digital identity within Europe which is necessary for coin usage,” Hoeptner added.
Even with MiCA bringing more consistent rules, the European Union still struggles to establish a single approach to managing its currency, as there isn’t one central financial body overseeing it all.
“The biggest challenge is that although we have a unified regulatory framework with MiCAR, we don’t essentially have a unified European monetary policy comparable with the US when it comes to pushing for widespread adoption of stablecoins,” Hoeptner said.
As seen in many cases, however, growing crypto adoption also comes with traditional financial institutions feeling threatened by such a shift.
Traditional Players: Resist Change or Seize Opportunity?
Established financial institutions are typically cautious about adopting new technologies or systems, especially when they’ve spent decades developing and refining traditional financial infrastructure.
The integration of euro-backed stablecoins introduces a shift from legacy banking practices and the familiar fiat systems that these institutions are used to. Lack of understanding or fear of loss of control may prompt financial institutions to resist this change.
According to Hoeptner, the biggest risk the institutions themselves can run lies in not doing anything at all.
“The fear of adoption of the old establishment is the biggest risk which essentially could be of great harm when instead of tackling the risks of digitization, rejection leads to an ultimate dependence on a non-European solution,” he said.
A euro-backed stablecoin could, in fact, complement the digital euro, the government-backed digital version of the EU’s national currency.
The official digital euro would ensure security, stability, and regulatory oversight, while private stablecoins would offer greater flexibility, programmability, and access to innovative features like smart contracts and decentralized finance.
In this scenario, these two forms of digital currency would not be direct competitors but instead play complementary roles in Europe’s digital economy. Together, they could provide a broader spectrum of options for users and businesses.
Reducing Reliance and Enhancing Influence
While USD-backed stablecoins currently dominate Europe, the implementation of MiCA regulation opens the door for euro-backed stablecoins to gain prominence. As adoption increases, these stablecoins can reduce Europe’s reliance on the US dollar and serve as a bridge currency.
Moving forward, integrating euro-backed stablecoins alongside the digital euro could bolster Europe’s financial sovereignty, enhance its competitiveness, and decrease dependence on external currencies.
