The discussion on stablecoins in the EU is intensifying. Euro-based stablecoins are now part of a larger institutional discussion about regulatory coordination, digital financial infrastructure and the architecture of cross-border payments.
Given the increased institutional interest European banks are increasingly interested in stablecoins narrowing the bridge between traditional finance and the crypto world. Twelve major European banks have formed a consortium named Qivilis, to launch a euro-backed
stablecoin by mid-2026, in a decisive push to counter US dollar dominance in the global stablecoin market. The initiative comes as European regulators grow increasingly concerned about the bloc’s overwhelming reliance on dollar-denominated tokens.
In this blog we will look at the reasons behind this move, the various initiatives of European banks, especially the Qivilis project that will be looked at in more detail, especially what it may bring. But also the official warnings regarding the risk it
may bring that recently entered the market.
Distinction between bank issued stablecoins and those from non-bank firms
One should make a distinguishing between bank-issued stablecoins and those from non-bank firms that normally dominated the market.. Long time being the area of non-bank firms, there is a growing move towards bank-issued stablecoins triggered by the
increased institutional demand. The global financial sector, including numerous banks, is actively experimenting with stablecoins. Bank-issued tokens benefit from direct access to central bank liquidity, enabling them to convert more easily into cash during
financial stress. They are also subject to stricter EU-level oversight, making them structurally more resilient.
Why this move: imbalance
There are various reasons why this move towards more European activity in the stablecoin area. There is a wider surge of institutional interest in stablecoins in Europe. That requires legal clarity, auditability, and integration with existing systems.
Stablecoins are no longer limited to niche crypto activity but are increasingly used in broader financial workflows. This distinction matters for European banks and corporates by offering a regulated instrument designed for institutional use.
Beyond efficiency, there is a geopolitical component. The move reflects a gap in the current EU market structure. While stablecoins have reached significant scale globally, the stablecoin market is dominated by foreign, dollar-backed assets. European banks
and policymakers step up efforts to reduce this reliance on dollar-denominated stablecoins in digital payments and settlement. By launching a euro-pegged digital asset within a regulated environment, European banks aim to capture the growing institutional
demand in Europe.
Digital payments are key for new euro-denominated payments and financial market infrastructure. Relying on non-EU payment rails creates a vulnerability for European companies. The various initiatives will contribute to Europe’s strategic autonomy in payments.
They aim to strengthen Europe’s financial and digital sovereignty and complement the European Central Bank’s planned digital euro.
Present state: dollar stablecoin dominance
The current landscape highlights a stark contrast. The stablecoin market remains heavily dollar-dominated. As of April 2026, the global stablecoin market is valued at roughly $320 billion, with an overwhelming 99% of that supply tied to U.S. dollars
including dollar-linked tokens like USDDT and USDC. Circle’s EURC dominates the European stablecoin market, hosting over 50% of this market. The euro accounts for only a fraction, leaving European regulators and financial institutions eager to level the playing
field.
This imbalance highlights the absence of a scalable euro alternative rather than a lack of demand. European policymakers are increasingly pushing to reduce dollar dominance. Europe’s financial industry is seeking euro-denominated alternatives as it tries
to reduce reliance on dollar-based stablecoins in digital payments and settlement. European banks see room to compete, particularly in cross-border payments where traditional infrastructure can be slow and costly.
MICA regulatory framework and stablecoins
The Market in Crypto Assets (MiCA) regulatory framework, which fully came into effect for stablecoins in June 2024 and 2025, provides a defined structure for issuing and managing digital assets within the European Union (EU), removing uncertainty
that previously limited participation from large banks. Under the proposed MICA framework all crypto-asset issuers need EU presence and must follow strict compliance standards. Any such operator would be barred from offering tokens in the European Union (EU)
unless the European Commission has formally determined that their home country’s regulatory framework is equivalent to EU standards.
MICA mandates stringent reserve, transparency, and supervisory requirements for stablecoin issuers. This harmonized approach should boost confidence in euro-pegged digital assets and pave the way for institutional adoption. With rules now in place, financial
institutions can approach stablecoins as an extension of existing financial infrastructure rather than as an experimental product. The MICA regulation will reshape how banks handle digital currencies 2027. MiCA regulation has created a clearer path for institutional
participation forcing financial institutions to rethink their digital strategies, while payment demand from clients keeps growing.
EU policy makers: not watching from the sideline
The reliance on dollar-backed stablecoins has drawn criticism from European policymakers. The dollar’s grip on digital payments raises concerns about Europe’s monetary sovereignty and payment system stability. Policy makers warn that Europe cannot
allow its digital payment infrastructure to be dominated by foreign currencies.
European governments and financial institutions however are not watching from the sidelines. They are rethinking their digital payment strategies, pushing to reduce reliance on dollar-linked digital assets in payments and settlements and develop euro-denominated
alternatives. The goal is clear: reduce exposure to systems outside European control. Coordinated action between banks and policymakers could shift the digital currency balance.
- France Finance Minister urges European banks to adopt euro stablecoins
The French Finance Minister raised concerns about the euro’s limited presence in the stablecoin market. He voiced dissatisfaction with the comparatively small volume of euro-pegged stablecoins when measured against their dollar counterparts.
To reduce the systemic risks from dollar-based stablecoins in European decentralised finance (DeFi), Europe needs more euro-denominated stablecoins. He pushed European banks to explore tokenised deposits as a solution. The minister further called for stricter
limits on dollar-based stablecoin payments under the MiCA framework to mitigate systemic risk and protect the euro.
This push represents a strategic move to curb “digital dollarization” in European payments and DeFi, countering the dominance of dollar-linked tokens like USDT and USDC
- Bank of France Pushes for Limits on dollar-based stablecoins
Also the Bank of France raised concerns about the effectiveness of MICA, emphasizing the need for stronger European alternatives to reduce reliance on dollar-backed stablecoins. Their widespread use in Europe risks what the Bank called “stablecoinisation”
and “dollarisation” of the EU’s payment system, carrying inherent vulnerabilities and potential financial stability risks.
For that reason the Bank of France wants tighter limits on non euro-based stablecoins in every day payments under MICA (read dollar-based stablecoins). This includes tightening oversight of crypto assets held outside regulated platforms such as reporting
for personal/self hosted wallets above a 5,000 euro threshold to improve transparency and reduce regulatory arbitrage in times of stress to protect the euro. These tighter rules, aim to strengthen monetary sovereignty, and give euro pegged stablecoins a competitive
edge over dollar-based alternatives in the European market.
- Germany – Italy proposal: block foreign stablecoin operators
A Germany-Italy paper argues that the current regulatory framework MICA has gaps when it comes to cross-border schemes where the issuing entity of the stablecoin sits outside EU jurisdiction. Both countries are pushing for sweeping new powers to block foreign
stablecoin operators from the EU unless their home countries meet EU regulatory standards. If that guarantee cannot be met the European Banking Authority (EBA) would be required to “pull the plug entirely”, banning the stablecoin from operating in the EU.
They have proposed to establish a comprehensive and harmonized EU regulatory framework for global stablecoins from third-country multi-issuance schemes to strengthen financial markets safeguards, ensuring the stability and sovereignty of the EU financial
system. The proposal would also bring large stablecoin issuers under direct EBA supervision by classifying participation in a third-country multi-issuer scheme as an automatic trigger for “significant” status. Given the US currently has no comparable framework,
the proposal could effectively shut major dollar stablecoins out of the EU entirely.
Surge in European institutional interest: stablecoins move into core bank functions
The European stablecoin market has consolidated into a high-stakes race between crypto native issuers and banking consortia.. Euro stablecoins have surged under MiCA as regulatory clarity attracts institutional capital into euro-denominated digital
assets. Stablecoin adoption in Europe is increasingly shifting from strategy tot execution, with demand increasingly driven by real-world institutional needs, triggered by cross border payment inefficiencies. Companies are thereby looking to use stablecoins
to move funds faster, and reduce costs. Initial use cases center on cross border payments and settlement, where stablecoins offer faster transaction speeds, lower costs and the ability to operate outside traditional banking hours. The rise of MiCA-licensed
euro-backed stablecoins is also fuelling a massive capital rotation as investors migrate from unregulated offshore stablecoins to on-chain RWAs.
The case for euro-backed alternatives: Bank issued stablecoins
The European financial sector, including numerous banks, is actively experimenting with stablecoins. The strict classification of euro-pegged stablecoins as “E-Money Tokens” has fundamentally changed their demand. Clear rules requiring at least 30%-60%
of fiat-backed reserves to be held as bank deposits have increased institutional trust. A growing number of European banks are moving ahead to launch their own fully regulated euro-backed stablecoin as competition with dollar-based stablecoins intensifies.
These deals pretty much respond to MiCA’s regulatory pressure, which aims to streamline crypto operations across the EU.
For being prepared in the stablecoin world, banks and corporates across Europe are now actively selecting infrastructure partners, as the easiest way to meet these requirements without building everything from scratch, moving beyond early-stage exploration,
to support stablecoin adoption.
Examples
Major European financial players are already using euro-based stablecoins for tokenized fund management and wholesale payments. Here are some examples:
- Commerzbank teaming up with Circle for USDC integration. The bank wants stablecoins running through their payment systems before year-end.
- BNP Paribas went with Tether, focusing on cross-border transactions that could cut settlement times.
- Deutsche Bank announced it is working with Gemini exchange to help corporate clients issue and manage stablecoins. The partnership fits Deutsche Bank’s broader push to modernize digital asset offerings ahead of MiCA deadlines.
- Societe Generale has positioned its EURCV stablecoins around cross-border payments, onchain settlement, FX and cash management. The bank recently expanded its multi-chain strategy tom the Stellar network and XRP ledger to tap into cross-border payment ecosystems.
- Oddo BHF has launched a MiCA-compliant euro stablecoin.
- A consortium of banks, including ING, UniCredit and BNP Paribas is preparing a Swiss-franc stablecoin for the second half of 2026.
QIVALIS Consortium
The most interesting project and one of the EU’s most coordinated private sector efforts to challenge the dominance of dollar-pegged stablecoins in digital payments and settlement, is a consortium of 12 major European banks, including ING, UniCredit,
CaixaBank and BBVA.
The initiative aims to create a credible MICA-compliant European stablecoin alternative in digital payments. The alliance named Qivalis is targeting the launch of a MiCA-compliant euro stablecoin in the second half of 2026, pending regulatory approval.
Qivalis wants the token treated as a payments-grade instrument under the EU’s stablecoin regime — with governance, solvency expectations, and customer protection standards designed to match the MiCA environment. The stablecoin is tailored for institutional
use cases, designed to enable regulated onchain payments and settlement across Europe.
Domiciled in Amsterdam and pursuing Dutch Central Bank (DNB) authorisation, Qivilis will operate under an Electronic Money Institution structure under Dutch supervision, as a fully compliant, 1:1-backed euro stablecoin as a cornerstone of institutional-grade
on-chain payment infrastructure.
Qivalis has selected Fireblocks as its core infrastructure provider partner to power the MiCA-compliant euro stablecoin offering. Fireblocks will bring in the underlying technology infrastructure to support the issuance and distribution and secure the
stablecoin, including tokenization, wallet infrastructure, custody services, and treasury management systems, as well as features designed to support compliance such as identity verification and sanctions screening.
The platform thereby uses its institutional-grade tokenization engine and ERC-20F standard designed specifically for the permissioned access, environments, allowing institutions to apply governance controls and compliance checks directly within transaction
flows and audit-ready reporting that regulation required. These components may enable participating banks to offer clients a MICA compliant euro-denominated digital payment asset across multiple business lines.
The consortium’s stablecoin is intended to support institutional use cases and will enable near instant, low-cost access to efficient cross-border payments, programmable payment transactions, and improvements in supply chain management and digital asset
settlements. It reduces delays, lowers counterparty risk in certain contexts, and allows capital to move more efficiently between markets.
The project is not limited to digital asset trading. The consortium plans to integrate the stablecoin into corporate banking, trade finance, and securities settlement. This may expand the role of stablecoins from liquidity tools within crypto markets to
instruments used in mainstream financial operations. For banks, the model also introduces new revenue streams. Institutions can offer custody, transaction services, and payment orchestration linked to the stablecoin, creating additional layers of client engagement.
The architecture
- Fundamental settlement layer
Qivalis describes the planned euro-based stablecoin as a fundamental settlement layer that connects the efficiency of blockchain rails with traditional market infrastructure. The project rests on three pillars: institutional integrity, an open consortium
model, and neutrality
The structure
The stablecoin will be backed one-to-one to the euro, by cash deposits and high-quality liquid assets, supervised by the Dutch National Bank, with at least 40% of reserves held in bank deposits and the remainder in high-rated short-term eurozone sovereign
bonds..
Integrate AML and KYC processes
The platform supports MiCA compliance through built-in governance controls, operational resilience features, and direct integration of AML/KYC, sanctions screening, and fraud monitoring into transaction workflows. This approach allows regulatory requirements
to be embedded within the infrastructure rather than applied externally, reducing operational complexity for participating banks, ensuring regulatory alignment without compromising operational efficiency.
Multi-institution model: Consortium play
The architecture also supports a multi-institution model. Qivalis will operate as a shared market infrastructure, with multiple banks working together to avoid a fragmented landscape of separate “bankcoins” that do not interoperate. Each bank in the consortium
can operate its own services. It will give each member bank the opportunity to offer custody, wallet services, and payment orchestration directly to their clients if they choose, allowing institutions to capture new revenue opportunities, while maintaining
shared infrastructure. Fireblocks’ multi-institution architecture supports this consortium model with granular permission controls and role-based permissions and governance that meet institutional security and compliance standards.
What may it bring
By bridging traditional finance and digital innovation the Qivalis euro-based stablecoin project may offer significant efficiency and transparency, and will deliver security and trust to Europe’s evolving digital economy thanks to blockchain technology’s
programmability features. For corporate clients, the primary draw of an on-chain euro-based stablecoin is the elimination of settlement friction. The euro-based stablecoin will provide near-instant, 24/7 access, to efficient low-cost cross-border payments
and improvements in supply chain management and digital asset settlements, which can vary from securities to cryptocurrencies.
The Qivilis platform will enable member banks to capture this growing demand by integrating 24/7 cross-border settlement of financial instruments and crypto currencies, programmable payment capabilities, and treasury operations into corporate banking, trade
finance, and securities settlement services. This efficiency is particularly relevant for the emerging Web3 and Internet of Things (IoT) economies, where machine-to-machine payments require native digital currency.
Official warnings
But these plans are not without risks. A recent report from the European Blockchain Association highlighting concerns over the MiCA regulation framework. The report argues that while MiCA has enhanced the security of euro stablecoins, it has significantly
reduced their commercial competitiveness. The report criticizes two core restrictions of MiCA on euro electronic money tokens (EMT): the prohibition of interest payments to holders and the requirement for at least 30% (60% for major issuers) of reserves to
be held in bank deposits. The report suggests that in a positive interest rate environment, the interest ban places euro stablecoins at a disadvantage compared to bank deposits and foreign currency stablecoins with embedded yield mechanisms.
Additionally the European Central Bank highlights the financial stability implications of a growing stablecoin market. They warned that large-scale adoption of euro stablecoins could concentrate demand on certain short-term euro-area sovereign bonds, with
potential effects on yields and liquidity during redemption phases. These concerns illustrate the complexity of the debate, where financial innovation and systemic stability intersect.
Forward thinking
The 2026 launch target for the Qivilis project marks a structural turning point involving the inflow of European capital and the securing of digital payment sovereignty. The trend indicates a new stable and compliant environment for European digital
assets.
Euro stablecoins nowadays account for nearly 13% of the tola global payments activity. By providing a compliant, euro-backed alternative, the Qivilis initiative could set the stage for broader adoption of euro-based stablecoins in the EU region. Given the
US currently has no comparable framework, the proposal could effectively shut major dollar stablecoins out of the EU entirely.
The broader implication is that stablecoins are moving closer to regulated financial infrastructure. They are increasingly being integrated into systems controlled by banks and overseen by regulators. This changes both perception and usage, especially among
institutional participants. If institutional adoption succeeds, structural market growth is expected
The success of the initiative will depend on regulatory execution as much as technical delivery. At the same time, competition is likely to increase. Other institutions may launch similar products as regulatory clarity improves, particularly if demand for
euro-based digital settlement grows.
