Europe risks ‘digital dollarization’ as banks race to launch euro stablecoin

Europe risks losing control of its financial future to the U.S. dollar unless it brings the euro onto blockchain rails, according to Jan-Oliver Sell, CEO of bank-backed stablecoin project Qivalis.

The warning reflects the growing concern among European banks and policymakers that the next phase of global finance, increasingly built on blockchain infrastructure, is being dominated overwhelmingly by dollar-pegged stablecoins such as Tether’s USDT and Circle’s USDC.

“If we don’t have a euro onchain with depth of liquidity, then the only alternative is the U.S. dollar,” Sell told CoinDesk. “That’s a real risk to Europe’s financial and digital sovereignty.”

Stablecoins are no longer just crypto. They are now at the core of financial systems globally with a market capitalization of roughly $314 billion currently but could rise to anywhere between $800 billion and $1.15 trillion in the next five years, according to a recent Jeffries calculation.

In traditional finance, the euro accounts for roughly 20% to 25% of global activity, making it the world’s second reserve currency, Sell said. Onchain, however, its presence is almost nonexistent.

“In the blockchain space, the euro makes up about 0.2% of transactions,” Sell said. “That’s a huge disconnect.”

Top 12 EU banks vying for stablecoin dominance

Qivalis, backed by a consortium of 12 major European banks including ING, UniCredit and BBVA, is attempting to close that gap by issuing a MiCA-compliant euro stablecoin.

The project is targeting a launch as soon as regulatory approval is secured, with Sell pointing to the second half of the year as a goal, depending on licensing timelines with the Dutch central bank.

Sell said the consortium aims to build the “default” euro-denominated token for global crypto markets, effectively creating a European alternative to dominant dollar stablecoins.

“We want to be the main issuer of euro stablecoins globally,” he said. At its core, Qivalis is positioning itself as infrastructure rather than just a token. “We’re building the interface between blockchain and the euro,” Sell said. “It has to be available wherever the use cases are.”

Qivalis is designed to address a key issue that has held back euro stablecoins so far: fragmentation.

“A couple of banks trying to issue their own coins just fragments the space further,” Sell said. “Bringing institutions together creates the distribution and liquidity needed to make it usable.”

Not the ECB’s digital euro

The project comes as the European Central Bank (ECB) continues work on a digital euro it aims to release no earlier than 2029, but Sell said the two efforts are fundamentally different.

ECB President Christine Lagarde recently said the bank had finalized its part of the central bank digital euro and it was now up to political institutions to act. The project, which aims to create a public digital means of payment, is under review by the European Council and the European Parliament.

Qivalis will issue a private, MiCA-regulated stablecoin, while the ECB’s plans rely on centralized infrastructure.

“We don’t see it as competition,” Sell said. “It’s an enhancement of the same financial stack.”

He described a “monetary stack” in which central bank money sits on centralized systems, while blockchain-based use cases, such as cross-border payments and onchain settlement, require a euro-native asset on public networks.

“At the moment, if you want to operate onchain, you’re effectively forced into the dollar,” he said.

A race against dollar dominance

The urgency behind the project is tied to how quickly financial activity is shifting toward blockchain-based systems — from crypto trading to global payments and decentralized finance.

Qivalis is betting that a bank-backed, regulated approach can compete with incumbent dollar stablecoins by building liquidity and integrating across exchanges, custodians and DeFi platforms.

“We’re looking to build that entire ecosystem around the euro onchain,” Sell said.

Part of the challenge is not just issuing the token, but creating demand in markets where dollar stablecoins are already deeply embedded.

Sell pointed to currency risk as one reason euro-denominated alternatives could gain traction.

“If you’re a European user earning yield in dollars, you’re also exposed to FX risk,” he said, noting that exchange rate moves can offset returns.

A question of financial sovereignty

As more financial activity moves onto blockchain rails, the absence of a widely adopted euro stablecoin could leave Europe structurally dependent on dollar-based infrastructure.

“One of the risks is that as more activity moves onchain, if there’s no usable euro, then everything just happens in dollars,” he said.

“We’re looking to build a cornerstone of European digital autonomy. If we don’t have this, we will face dollarization.”

The goal, he added, is not to replace the dollar outright, but to ensure the euro remains competitive in a rapidly evolving financial system.

“It’s about putting the euro back in its place as the second global reserve currency in this space as well,” Sell said. “It’s about putting the financial future back in our hands as Europeans.”