The global competition in digital currencies is entering a heated phase. Recently, EU finance ministers reached an agreement on a roadmap for the digital euro supported by the European Central Bank, aimed at establishing European economic and digital sovereignty and reducing dependence on American technology. Meanwhile, China's offshore renminbi stablecoin AxCNH has been launched globally, and the U.S. has paved the way for the issuance of dollar stablecoins through the GENIUS Act. A global struggle over the first trillion-dollar stablecoin is unfolding among China, the U.S., and Europe, and its outcome will profoundly impact the future landscape of digital finance and the international monetary system.
- EU Digital Euro: A Strategic Step Towards Digital Sovereignty
EU finance ministers met in Copenhagen with European Central Bank President Christine Lagarde and EU Commissioner Valdis Dombrovskis on Friday to finalize the digital euro roadmap.
Independence from Traditional Systems: The roadmap will operate independently of the U.S. Visa and Mastercard systems, marking another step towards establishing European economic and digital sovereignty.
Political Statement: Lagarde stated at a press conference, "The digital euro is not just a means of payment; it is also a political statement about European sovereignty and its ability to handle payments (including cross-border payments), as well as Europe's infrastructure and solutions."
Legislative Process: The European Commission initially proposed the concept of a digital euro in 2023, with discussions heating up last year, especially after President Trump promoted stablecoins pegged to the dollar globally. The proposal from the European Commission needs approval from the European Parliament and the European Council, which plans to complete the review of the proposal by the end of 2026, while the European Central Bank hopes to legislate by June.
Privacy and Concerns: Although some EU countries have their own digital currencies, no single currency has been accepted across the entire 27-member bloc. Some European bankers worry that state-backed digital currencies could siphon off funds from traditional banks, limiting their ability to issue loans in fiat currency and weakening the traditional financial system. The European Central Bank has stated that privacy will be an important design feature of the digital euro, which will not be programmable like limited-use digital vouchers and will not allow the government to track individual spending.
- The Geostrategic Importance of Stablecoins in the U.S.-China-Europe Triad
The global stablecoin market is becoming a new battleground for geopolitical competition, with China, the U.S., and Europe actively positioning themselves to seize dominance in future digital finance.
Significant Advantages of the Dollar:
MetaMask's mUSD: mUSD operates within MetaMask, issued through Stripe's Bridge, and uses M0 for on-chain mechanisms. The reserve structure is supported and reported at a 1:1 ratio. The product is set to launch in mid-September 2025 on Ethereum and Linea, featuring wallet-level issuance and redemption capabilities, connecting to existing card and merchant pathways. This combination places issuance, spending, and settlement within the same user interface and developer stack, potentially compressing settlement steps without introducing new front ends.
GENIUS Act: The U.S. now has a federal rulebook. The GENIUS Act, enacted in 2025, requires tokens pegged to fiat currencies to hold liquidity reserves and disclose information monthly, and can be issued by banks or licensed non-bank institutions. This opens the door for payment companies to distribute stablecoins within existing merchant networks.
Market Dominance: According to DeFiLlama, the value of stablecoins pegged to the dollar is approximately $291.7 billion, with Tether accounting for about 59%, indicating significant dominance.
Europe's Differentiated Strategy:
MiCA Regulation: Europe is developing a different strategy. MiCA has shaped the competitive landscape even before any central bank tokens emerged. According to expert guidance summarizing MiCA's payment usage thresholds, non-euro stablecoins used for daily payments in the eurozone have a quarterly average daily usage cap of 1 million transactions or €200 million, which will drive point-of-sale activities towards euro-denominated tools and ultimately implement after the digital euro program launches.
Domestic Retail-Centric: Europe's development path is centered on domestic retail. If non-eurozone tokens reach the MiCA usage cap within the EU, merchants will be more inclined to use euros for daily transactions, and the digital euro may become the default payment method once officially launched.
Asia's Policy Orientation:
AxCNH: China's offshore renminbi stablecoin AxCNH has been launched in Hong Kong and is licensed under Hong Kong's stablecoin framework, targeting settlements related to the Belt and Road Initiative. Hong Kong's stablecoin framework provides a compliant venue, while convertibility and mainland policies remain swing factors for expanding CNH tokens across trading platforms, custodians, and exchanges.
Cautious Attitude: Mainland China's cautious stance on tokenization has also surfaced, with reports indicating that securities regulators have asked some brokers to suspend risk-weighted asset activities in Hong Kong.
Corridor Strategy: AxCNH and other country-pegged tokens point to a corridor strategy rather than a global capture strategy. The issue is not whether CNH can replace dollar liquidity, but whether Hong Kong's offshore issuance licenses and trade financing platforms can maintain settlement volumes on specific routes.
KRW1: South Korea's digital asset infrastructure company BDACS has launched the KRW1 stablecoin pegged to the Korean won, aimed at enhancing the won's liquidity in international markets.
- The Battle for a Trillion-Dollar Market Cap: Growth Potential and Challenges
The importance of stablecoins in the global economy is increasingly evident. According to research from the International Monetary Fund and McKinsey, the addressable base for cross-border activities reaches trillions of dollars. If 1% to 2% of global cross-border payments shift to tokenized channels, the share of real-world settlements could reach $2 to $4 trillion annually.
Growth Targets: Starting from a nearly $292 billion baseline, reaching $1 trillion within 24 months would require an annual growth rate of about 85%, approximately 127% within 18 months, and over 240% within 12 months.
Key Catalysts: The most reliable catalysts are emerging in the U.S., as the GENIUS Act reduces policy risks for payment companies, credit card partners, and banks looking to issue or distribute stablecoins, while the yields on short-term government bonds continue to make fully reserved tokens economically viable for working capital and financial operations.
Implementation Timeline: Legislation in early 2026 will still leave two and a half to three years for construction, testing, and finalizing the rulebook, meaning large-scale availability is expected around 2027 or 2028.
Three Operational Questions: Who will win the trillion-dollar stablecoin battle will depend on three operational questions:
Distribution: How quickly mUSD, USDC, and peers can bind issuance to checkout, invoicing, and payroll, and convert settlements into bank deposits without manual steps.
Rulebook: Whether U.S. licensing will produce bank-grade programs, and whether MiCA's daily caps will push EU retail towards euro-denominated tools before the digital euro arrives.
Corridor: Whether Hong Kong's licensing, custody, and trading infrastructure can incorporate CNH tokens into trade settlements without being affected by policy.
Conclusion:
The release of the EU digital euro roadmap marks a new phase in the global stablecoin race. Dollar stablecoins, with their first-mover advantage and clear regulatory framework, dominate the market; Europe is committed to building a retail payment system centered around the digital euro; while China and other Asian countries explore "corridor strategies" through offshore renminbi stablecoins and Korean won stablecoins to enhance the international influence of their currencies. This trillion-dollar stablecoin battle is not only a contest of technology and markets but also a deep game of digital sovereignty and financial influence among nations. Ultimately, who will prevail will depend on their execution in distribution, rulebook, and corridor strategies.
Related Reading: China's offshore renminbi stablecoin AxCNH launches globally, accelerating the internationalization of the renminbi.
Original Article: “EU Releases Digital Euro Roadmap, Joining China and the U.S. in the Race for the First Trillion-Dollar Stablecoin”
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