Meanwhile, euro-backed stablecoins remain a niche product with little traction outside the crypto ecosystem. Despite new regulations, do they actually solve a payment problem—or are they redundant in a region where banking is already efficient?

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A Market Dominated by the Dollar

As of March 2025, the total market capitalization of U.S. dollar-backed stablecoins has surpassed $205 billion, reflecting their growing role in global financial markets. (Source). Tether (USDT) remains the dominant player with $140 billion in circulation, while USD Coin (USDC) has expanded to $60 billion, boosted by increased institutional adoption (Source). Newer entrants such as Ethena USDe (USDe) and FDUSD have also gained traction, with market caps of $5.4 billion and $1.9 billion, respectively (Source).

In contrast, euro-backed stablecoins continue to represent a small fraction of the global stablecoin market with liquidity remaining low, adoption limited, and institutional demand remaining weak. As of March 2025, euro-backed stablecoins have a combined market capitalization of approximately $287 million. This figure represents a small fraction of the global stablecoin market, which is predominantly dominated by U.S. dollar-pegged assets. (Source)

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Leading Euro-Backed Stablecoins by Market Capitalization:

• Euro Coin (EURC): Approximately $124 million. (Source)
• EUR CoinVertible (EURCV): Approximately $45.4 million. (Source)
• Euro Tether (EURT): Approximately $31.6 million. ​(Source)
• STASIS EURO (EURS): Approximately $10.9 million. ​(Source)

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Do Euro Stablecoins Solve a Payment Problem?

Despite growing regulatory clarity under MiCA, euro stablecoins have yet to prove their necessity. The Single Euro Payments Area (SEPA) already enables fast, low-cost, 24/7 instant payments across Europe, with funds settling in under ten seconds. Unlike USD transactions, euro-denominated transfers within SEPA do not face significant cost or speed barriers, reducing the need for blockchain-based alternatives.

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Key Limitations of Euro Stablecoins

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Minimal Real-World Use Cases USD stablecoins facilitate cross-border trade, remittances, and emerging market transactions. Euro stablecoins, by contrast, are primarily used within crypto trading and DeFi, with little adoption in real-world payments.

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Established Banking Access The Eurozone has widespread banking coverage and well-developed real time payments networks (SEPA), making stablecoins unnecessary for businesses operating within the region.

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Limited Institutional Interest Major banks and corporations have not adopted euro stablecoins for commercial payments. Unlike USD stablecoins, which have been integrated into global trade, settlement networks, and corporate treasury functions, euro stablecoins remain largely confined to niche crypto applications.

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Liquidity and Market Depth Constraints The market for euro stablecoins remains shallow, with low trading volumes and limited depth compared to USD-backed tokens. This restricts their usefulness for large-scale settlements and cross-border payments.

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No Cost Advantage Over SEPA Euro transactions via SEPA Instant already offer 24/7 near-zero fees and real-time settlement, making stablecoins redundant for most European businesses.

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Additionally, the European Central Bank is exploring a digital euro (CBDC) which may further reduce the need for euro stablecoins, limiting their role even in regulated finance.

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Why USD Stablecoins Continue to Lead

USD stablecoins have emerged as the preferred digital settlement mechanism for cross-border transactions, particularly in emerging markets. The U.S. dollar accounts for about 80% of global trade, and in high-inflation economies like Argentina, Turkey, and Nigeria, USD stablecoins serve as a stable store of value, shielding users from currency depreciation. For instance, in Argentina, Circle’s USDC is widely used for remittances and savings, providing some financial stability in a country with 250% annual inflation (Source).

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Beyond currency stability, USD-backed stablecoins solve key inefficiencies in global payments infrastructure:

Currency Conversion & Exchange Rate Risks

• Enable direct transactions without multiple conversions.
• Provide a hedge against local currency devaluation.

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Financial Access in Emerging Markets

• Facilitate transactions without requiring a bank account.
• Offer an option for savings and payment solutions in high-inflation economies.

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Greater Transparency and Efficiency

• Traditional wire transfers lack real-time tracking. Stablecoin payments settle on-chain, ensuring full transaction visibility.

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Reduced Reliance on Banking Intermediaries

• Transactions occur peer-to-peer, bypassing multiple unnecessary correspondents and reducing costs.
• Funds move directly from sender to receiver, avoiding traditional bank delays.

At the same time, it's important to note that stablecoins—while offering significant benefits—still carry risks related to potential regulatory shifts, reliance on issuer reserves, and exposure to underlying infrastructure or counterparty vulnerabilities.

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Conclusion: A Niche Role for Euro Stablecoins

While euro-backed stablecoins may find limited adoption in regulated DeFi applications and digital euro transactions, they do not address a clear payment inefficiency. With SEPA already offering real-time, low-cost transactions, their relevance remains largely confined to the crypto ecosystem rather than broader commercial or cross-border payment use cases.

By contrast, USD stablecoins have cemented their role in global payments, providing liquidity, stability, and accessibility where traditional banking falls short. As adoption grows, their influence is likely to expand further, reinforcing the dominance of the dollar in digital finance.

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Important: This communication is for informational purposes only and does not constitute financial or investment advice. It is intended exclusively for eligible corporate clients outside the UK and high net worth companies. Cryptocurrencies are highly volatile and carry significant risks, including potential total loss. Past performance is not a guarantee of future results. Seek independent professional advice before investing. Crypto-asset products and services mentioned here are not authorised or regulated by the UK FCA. These investments may lack the protections of FCA-regulated products.

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