The European Union is expediting the development of a digital euro following the United States’ endorsement of comprehensive legislation to regulate its stablecoin sector. The newly adopted regulation in the US has sparked concerns in Brussels about the euro’s long-term competitiveness in the crypto asset market.
Stablecoins: A Comparison Between the US and the EU
Recently, the US passed the Genius Act, providing a clear and comprehensive framework for the stablecoin market. The stablecoin industry in the US is predominantly dollar-centric, boasting a market size of $288 billion. USDT, the largest stablecoin, holds a market size of $167 billion, followed by USDC at $67.5 billion and USDe at $11.8 billion. Observers in the EU have pointed out the necessity of accelerating the digital euro project following these developments.
In response to the legislation, officials in Brussels have started reevaluating the design options for the digital euro. Discussions revolve around whether the digital euro should remain confined within a closed system under the control of the European Central Bank or be developed on public blockchains.
It is known that EU officials and various stakeholders are debating different approaches regarding the technological infrastructure of the digital euro. Although many countries, like Turkey, are involved in similar discussions, time is of the essence. The decision on whether to develop the euro on public blockchains such as Ethereum 
$2,308 or Solana 
$85, or within a centralized system, remains unresolved. Meanwhile, the US has already moved beyond these concerns, as a closed network structure closely resembles the existing digital banking system.
Sources emphasize that the EU is currently focusing on distributing the digital euro entirely under state control and through a centralized system, although no conclusive decision has been reached yet.
Competition and Future Steps
Officials are acting out of concern that the EU could lag behind the US in digital innovation and financial competitiveness. A key factor driving the acceleration of the digital euro project is the necessity for the euro to compete internationally with other digital currencies.
An EU official remarked, “The US’s new regulation mandates Europe to swiftly act on the digital euro.”
The EU has made significant progress in ensuring investor confidence with MiCA. However, to maintain the currency’s global prevalence, strategic foresight up to ten years ahead is essential. Whereas even China, having a CBDC and being a highly closed country, has started discussions on issuing stablecoins on public networks, the EU’s indecision is becoming quite ludicrous.
In the upcoming period, EU institutions are expected to debate and examine different technological infrastructure options for the digital euro, with an announcement of the final decision anticipated.
