What happened?
The European Union is speeding up plans for a digital euro following the US’s recent stablecoin legislation, known as the Genius Act. The new US law sets comprehensive rules for stablecoins, requiring issuers to maintain full reserves and adhere to strict regulations. This has prompted EU officials to reconsider their approach to the digital euro, including whether it should run on a public blockchain such as Ethereum or Solana.
Who does this affect?
This move primarily affects EU policymakers, financial institutions, and anyone involved in the digital currency market. It also impacts consumers and businesses that rely on euro-based transactions, as the choice of technology will influence the digital euro’s accessibility and usability. Additionally, global cryptocurrency markets and competitors in the stablecoin space are closely watching these developments.
Why does this matter?
The decision on how to implement the digital euro could have significant market implications, potentially altering the landscape of cross-border payments in favor of the euro. An open blockchain-based euro could enhance its global reach but also poses privacy and security risks. With the US taking swift regulatory actions, there’s pressure on the EU to make decisions that will maintain the euro’s competitiveness in the international financial market.