The European Union is fast-tracking its digital euro initiative, a strategic move influenced by the United States' recent enactment of the GENIUS Act and the global competition in digital finance. This accelerated approach aims to ensure the euro's relevance and competitiveness in an evolving digital economy.
The U.S. GENIUS Act, signed into law on July 18, 2025, by President Donald Trump, establishes a regulatory framework for stablecoins pegged to the U.S. dollar. This legislation is seen as a catalyst for the EU to re-evaluate its digital euro strategy, with concerns that U.S. stablecoin regulation could bolster the dollar's global position and potentially lead to capital outflows from European banks. ECB executive board member Piero Cipollone has previously warned that dollar-backed stablecoins could divert capital from European financial institutions, impacting the euro's autonomy in cross-border payments.
In response, the EU is now seriously considering deploying the digital euro on public blockchain networks, such as Ethereum and Solana. This represents a shift from earlier considerations of a private, centrally managed system. The exploration of public blockchains aims to enhance the euro's integration into decentralized finance (DeFi) and global payment systems, potentially improving adoption and cross-border efficiency.
However, this strategic shift introduces challenges. The transparency of public blockchains raises questions about compliance with the EU's General Data Protection Regulation (GDPR) and the European Central Bank's objective of maintaining cash-like anonymity. Technical considerations regarding the scalability of Ethereum and the reliability of Solana are also being assessed. Policymakers are also concerned about the governance implications of utilizing public blockchains, where upgrades and validator control might fall outside direct state oversight.
The potential for a widely accessible digital euro to draw deposits away from European banks remains a critical risk, with proposed holding limits being explored to mitigate this impact. The European Central Bank (ECB) is evaluating both centralized and decentralized technologies, with no final decision yet made on the digital euro's infrastructure. The preparation phase for the digital euro is ongoing, with key decisions anticipated by October 2025 and a potential launch between 2026 and 2027, pending legislative approval. This accelerated timeline underscores the EU's commitment to safeguarding its monetary sovereignty and ensuring the euro's enduring role in the global digital economy.