While the ECB warns, Europe is building its own digital dollars
European crypto companies are increasingly focusing on dollar stablecoins, while Europe is trying to further strengthen the international position of the euro.
Europe wants to make the euro more important internationally, but the US dollar remains particularly popular in the crypto world. European companies are seeing a lot of demand for stablecoins linked to the dollar, especially for international payments.
The German AllUnity is responding to this with USDAU, a new digital dollar. This creates a striking contrast. Europe wants to become less dependent on the US currency, while European crypto companies are developing more products around the dollar.
According to AllUnity CEO Alexander Höptner, there is a simple reason for this. The dollar still plays a major role in world trade. European companies that do business internationally are therefore not satisfied with digital euros alone.
"In world trade and currency markets, the US dollar is the connecting factor," says Höptner.
Stablecoins can be useful for this. These are crypto coins whose value is linked to, for example, the dollar or euro. Businesses can use them to quickly send money across borders, without relying on banks' opening hours.
Stable Mint is also seeing a lot of demand for digital dollars. CEO James Bennett thinks that Europe cannot just stop this development.
"The demand is for dollar stablecoins, and that is something that Europe cannot simply wish away," Bennett said.
More and more European companies are therefore trying to market their own dollar stablecoin. In addition to AllUnity, Stable Mint and the French bank Societe Generale have developed such coins.
Nevertheless, these European alternatives are little compared to the market leaders for the time being. According to CoinGecko, USDSM and USDCV each have a size of about 13 million dollars.
By comparison, Tether (USDT) is about $184 billion. Circle's USDC comes in at about $74 billion.
The digital dollar market is therefore still dominated by a small number of large providers.
This creates a difficult situation for Europe. The European Central Bank (ECB) is concerned about the growing influence of digital dollars, as they can further strengthen the international position of the US currency.
At the same time, European companies that need dollars for their international trade have little reason to stop.
The discussion therefore shifts to the rules. Europe will have to determine which dollar stablecoins may be offered on the European market and which conditions companies must meet.
Meanwhile, the same challenge remains for European policymakers: to make the euro more important in a world where companies still make massive use of the dollar.