Euro-stablecoins lost the race before it even started: an analysis of the disaster
The stablecoin market is experiencing a paradoxical moment: the Turkish lira is overtaking the euro in this segment. On-chain transfers in lira for 2025 have reached $3.4 billion, making it the second most popular after the dollar. For the euro, this is not just a defeat — it is a collapse.
Numbers That Cannot Be Ignored
The total market capitalization of stablecoins has exceeded $316 billion, but the share of euro-denominated tokens is a meager $912 million — less than 0.3% of dollar-based coins. The gap between USDT ($185 billion) and EURC ($430 million) is 200-fold. Even after MiCA came into effect, the trading volume of euro stablecoins peaked at $700 million in March 2026 but quickly declined. The daily volume now stands at around $100 million, compared to $70 billion for dollar equivalents.
Regulatory Deadlock: MiCA as a Brake
MiCA, intended to give euro tokens a competitive advantage, has become their worst enemy. The requirement to hold up to 60% of reserves in local banks creates an unbearable burden for issuers. Unlike the flexible GENIUS Act in the U.S., where regulation adapts to the market, the EU even rejected Bruegel's proposal to ease the rules. The ECB, led by Christine Lagarde, fears disintermediation and is betting on tokenized deposits rather than stablecoins.
Market Realities: Networks, Demand, and Tether's Exit
The dollar dominates due to the network effect: the entire crypto infrastructure is tied to USD pairs. Euro tokens offer minimal liquidity and arbitrage opportunities. Demand from banks and retail is virtually nonexistent — in Europe, efficient payment systems like TARGET2 and TIPS make stablecoins redundant.
The culmination was Tether's exit: the company stopped issuing EURT and did not apply for a MiCA license. Paolo Ardoino called the reserve requirements "fundamentally incompatible" with the business model. Major exchanges are already removing USDT pairs for European clients, further exacerbating the crisis.
Outlook: Fog and the Wait for CBDC
Euro stablecoins are stuck in a vicious cycle: low demand, strict regulation, and lack of infrastructure. A push could come from the digital euro, but its launch is not expected until the second half of 2027 at the earliest. By then, dollar stablecoins will have strengthened their dominance to a level that will be impossible to overcome.
My analysis: The euro lost not because of technology, but due to the strategic shortsightedness of regulators. While the EU fights the "shadows" of the crypto market, the dollar is capturing the future of finance. Without a radical overhaul of the rules and incentives for issuers, euro stablecoins will remain merely a statistical anomaly against the backdrop of the dollar tsunami.