Any frequent user of stablecoins will probably say USD is king – Tether
and Circle, the two biggest names in the market, are both pegged to the dollar,
and other currencies never really come close.
But let me tell you, for as long
as Trump continues on his war path against the US economy, that monopoly will
shift. By the end of the President’s term, I think we’ll see Europe’s
stablecoin moment come in full force.
War path, of course, is fairly hyperbolic – but it’s no lie that Trump
has certainly tested the limits of US economic performance. His trade policy is
heavy-handed, his overall policymaking is capricious, and his big fiscal
swings, namely in the “big, beautiful bill”, could add $3.3 trillion to the
already burgeoning US budget deficit.
US Economic Woes Hit Dollar
You don’t have to be a macro specialist to know how these affect the
dollar. The USD has fallen to a three-year low against a basket of major
currencies in the initial bout of Trump 2.0, marking its worst half in over 50
years. It’s also made losses against emerging markets and the G10. It’s no
exaggeration to say the dollar is in the doldrums.
Considering this, ECB President Christine Lagarde’s calls for a “global
euro moment” make complete sense. If there’s ever a time to capitalise, it’s
now – the euro is currently nudging $1.20, a level only last met four years
ago, marking a pivotal sea change in global FX power.
Plus, according to
Reuters, central bankers are beginning to shift away from their choice reserve
in the dollar to both the euro and the renminbi, and everyone’s favourite safe
haven, gold. De-dollarisation is all the rage at the moment.
So, What Does This Mean for Stablecoins?
Well, as the dollar continues to wane –and Europe continues to pounce
on its demise – I think the USD’s grip on the stablecoin market will weaken.
EUR-pegged coins – including the likes of EURC – will begin to threaten the
greenback’s DeFi monopoly.
Of course, I’m not saying the euro will now dominate all stablecoin
transactions – that’s too farfetched. On the market-cap league tables, there
are 56 prominent USD-pegged stablecoins, compared to a meagre 12 tied to the
euro.
And further than that, Tether comprises approximately 70% of the market,
and its closest competitor, Circle, recently completed a $5.4 billion IPO.
Europe isn’t even coming close.
It’s just that the USD’s dominance may soon be tested. And it’s not just
FX power struggles that will light the touchpaper; Europe’s regulatory
landscape is becoming increasingly supportive of digital assets.
MiCA Regulations
The MiCA framework – the EU’s flagship regulations for digital assets –
was finalised earlier this year, giving crypto issuers and exchanges licensed
access to the regulated European market. OKX, Crypto.com, and Coinbase are
among those who have attained the bloc’s stamp of approval, and other exchanges
are in the midst of their applications as I speak.
Clearly, Europe is opening its once sceptical arms to crypto – and
better still, Tether is not MiCA compliant. It doesn’t have access to the
European market, leaving a vacuum for other coins to take its place and
strengthen their regional market share. We could feasibly see a whole
succession story take place on the continent.
Read more: South Korea Suspends Digital Won Project amid Stablecoin Push
So, let’s take all the factors at hand. We have a weakening dollar, a
strengthening euro, an increasingly pro-innovation EU, and a Trump that
continues to remain stuck in his whimsical ways. For me, if there was ever a
time for Europe to cement itself in the DeFi ecosystem, it’s now.
Europe Gains Crypto Ground
I’ve operated across Europe for most of my career – and I have to say,
there is a real difference between the EU now and the EU it once was. The bloc
is now ambitious, less risk-averse, and is willing to embrace crypto, let alone
to capitalise on the dollar’s long demise.
Capital continues to pour out of the US, and Europe continues to be one
of its main beneficiaries. We’re on the brink of European outperformance, and
personally, I can only see this soon reflecting in the stablecoin market.
While
complete de-dollarisation is far too unrealistic, I can certainly see a near
future where EUR-pegged coins increase in number and popularity. After all, the
more the euro continues to strengthen, the greater the number of transactions
we’ll see via the currency.
Europe has, in recent history, at least, only played second fiddle to
the US. And of course, that doesn’t exclude the euro’s popularity in the
stablecoin market, either. But, by 2028 – and by that, I mean the end of Trump
2.0 – I think we’ll finally see EUR-pegged coins muscle up to their USD
counterparts. It’s not a matter of if; it’s a matter of when.
Any frequent user of stablecoins will probably say USD is king – Tether
and Circle, the two biggest names in the market, are both pegged to the dollar,
and other currencies never really come close.
But let me tell you, for as long
as Trump continues on his war path against the US economy, that monopoly will
shift. By the end of the President’s term, I think we’ll see Europe’s
stablecoin moment come in full force.
War path, of course, is fairly hyperbolic – but it’s no lie that Trump
has certainly tested the limits of US economic performance. His trade policy is
heavy-handed, his overall policymaking is capricious, and his big fiscal
swings, namely in the “big, beautiful bill”, could add $3.3 trillion to the
already burgeoning US budget deficit.
US Economic Woes Hit Dollar
You don’t have to be a macro specialist to know how these affect the
dollar. The USD has fallen to a three-year low against a basket of major
currencies in the initial bout of Trump 2.0, marking its worst half in over 50
years. It’s also made losses against emerging markets and the G10. It’s no
exaggeration to say the dollar is in the doldrums.
Considering this, ECB President Christine Lagarde’s calls for a “global
euro moment” make complete sense. If there’s ever a time to capitalise, it’s
now – the euro is currently nudging $1.20, a level only last met four years
ago, marking a pivotal sea change in global FX power.
Plus, according to
Reuters, central bankers are beginning to shift away from their choice reserve
in the dollar to both the euro and the renminbi, and everyone’s favourite safe
haven, gold. De-dollarisation is all the rage at the moment.
So, What Does This Mean for Stablecoins?
Well, as the dollar continues to wane –and Europe continues to pounce
on its demise – I think the USD’s grip on the stablecoin market will weaken.
EUR-pegged coins – including the likes of EURC – will begin to threaten the
greenback’s DeFi monopoly.
Of course, I’m not saying the euro will now dominate all stablecoin
transactions – that’s too farfetched. On the market-cap league tables, there
are 56 prominent USD-pegged stablecoins, compared to a meagre 12 tied to the
euro.
And further than that, Tether comprises approximately 70% of the market,
and its closest competitor, Circle, recently completed a $5.4 billion IPO.
Europe isn’t even coming close.
It’s just that the USD’s dominance may soon be tested. And it’s not just
FX power struggles that will light the touchpaper; Europe’s regulatory
landscape is becoming increasingly supportive of digital assets.
MiCA Regulations
The MiCA framework – the EU’s flagship regulations for digital assets –
was finalised earlier this year, giving crypto issuers and exchanges licensed
access to the regulated European market. OKX, Crypto.com, and Coinbase are
among those who have attained the bloc’s stamp of approval, and other exchanges
are in the midst of their applications as I speak.
Clearly, Europe is opening its once sceptical arms to crypto – and
better still, Tether is not MiCA compliant. It doesn’t have access to the
European market, leaving a vacuum for other coins to take its place and
strengthen their regional market share. We could feasibly see a whole
succession story take place on the continent.
Read more: South Korea Suspends Digital Won Project amid Stablecoin Push
So, let’s take all the factors at hand. We have a weakening dollar, a
strengthening euro, an increasingly pro-innovation EU, and a Trump that
continues to remain stuck in his whimsical ways. For me, if there was ever a
time for Europe to cement itself in the DeFi ecosystem, it’s now.
Europe Gains Crypto Ground
I’ve operated across Europe for most of my career – and I have to say,
there is a real difference between the EU now and the EU it once was. The bloc
is now ambitious, less risk-averse, and is willing to embrace crypto, let alone
to capitalise on the dollar’s long demise.
Capital continues to pour out of the US, and Europe continues to be one
of its main beneficiaries. We’re on the brink of European outperformance, and
personally, I can only see this soon reflecting in the stablecoin market.
While
complete de-dollarisation is far too unrealistic, I can certainly see a near
future where EUR-pegged coins increase in number and popularity. After all, the
more the euro continues to strengthen, the greater the number of transactions
we’ll see via the currency.
Europe has, in recent history, at least, only played second fiddle to
the US. And of course, that doesn’t exclude the euro’s popularity in the
stablecoin market, either. But, by 2028 – and by that, I mean the end of Trump
2.0 – I think we’ll finally see EUR-pegged coins muscle up to their USD
counterparts. It’s not a matter of if; it’s a matter of when.
This post is originally published on FINANCEMAGNATES.
