A recent analysis from the European Central Bank (ECB) has drawn attention to the ramifications of the US dollar’s supremacy in the stablecoin sector, especially following the enactment of the GENIUS Act by President Donald Trump.
This trend could potentially escalate borrowing expenses for European nations, curtail the independence of the ECB, and amplify geopolitical reliance on the United States.
Digital Euro: A Call for Urgency
According to ECB adviser, Jürgen Schaaf, the strategic advantages that the US gains from its “stablecoin supremacy” could enable cheaper financing of its debt while enhancing its global dominance.
The analysis highlights the risks for Europe, cautioning that depending on dollar-based stablecoins for transactions and savings might weaken the ECB’s grip on monetary policy.
As reported by Reuters, the euro-denominated stablecoin market is currently underdeveloped, with a market cap of under 350 million euros, dwarfing that of rivals such as Tether (USDT) and Circle (USDC).
In response, the ECB’s adviser has called for the European Union to expedite the launch of a digital euro and promote the establishment of more euro-centric stablecoins.
Meanwhile, the newly passed GENIUS Act in the US has sparked newfound interest from traditional financial institutions in dollar-linked cryptocurrencies.
Large Financial Institutions Eyeing Stablecoin Innovation
Interactive Brokers Group, valued at approximately $110 billion, is reportedly considering the launch of its own stablecoin.
Founder Thomas Peterffy noted that while they’re still assessing how to integrate these assets for their customers, they acknowledge the transformational potential of blockchain technology within the financial industry.
Currently, Interactive Brokers has formed partnerships with platforms like Paxos and has invested in exchanges such as Zero Hash, gearing up to offer broad trading opportunities in cryptocurrencies. The firm aims to establish a system that enables instant, 24/7 stablecoin funding for brokerage transactions.
Despite this enthusiasm, Peterffy remains cautious about the swift rise of cryptocurrencies, remarking, “It’s fundamentally challenging to ascertain their intrinsic value.” He conveyed openness towards stablecoins but maintained skepticism about their true worth.
In a similar vein, Robinhood introduced its own stablecoin, the Global Dollar Network, in collaboration with other platforms like Kraken and Galaxy Digital.
This stablecoin, issued by Paxos, is pegged to the US dollar, enabling transactions without traditional banking dependencies. Additionally, asset manager and ETF issuer WisdomTree has launched its own version, USDW.
Such moves are reflective of the progressive shift occurring in the US towards a more favorable digital asset ecosystem. Notable financial institutions such as JPMorgan, Citigroup, and Goldman Sachs are also exploring these digital assets for potential operational benefits.
Featured image from DALL-E, chart from TradingView.com
