Used primarily for transferring money to other countries, often by migrant workers, they promise much faster and more efficient automated exchanges compared to traditional ones. President Trump has turned them into a weapon to support the US public debt. What about Europe…?
Payments giant PayPal already has its own digital currency, pegged to the US dollar. Last June, Société Générale launched its own private currency. And in recent weeks, other financial giants such as Citigroup, JPMorgan, Bank of America and Goldman Sachs have announced that they are increasingly exploring the field of digital “tokens”. The same goes for Western Union, a leader in international money transfers, and – according to the Wall Street Journal – also for Amazon and Walmart. These moves into the world of private cryptocurrencies are largely linked to the Genius Act, signed on July 18 by US President Donald Trump, which regulates the issuance and operation of stablecoins. But what exactly are they?
THE “SUSTAINABLE” FACE OF CRYPTOCURRENCY
Stablecoins are digital currencies issued by private entities on the blockchain – a distributed ledger across many interconnected computers – where transactions are stored securely and immutably. Unlike the “queen” of cryptocurrencies, Bitcoin, which is not a suitable means of payment due to its strong price volatility, stablecoins are designed to hold a stable value, usually tied one-for-one to an official currency, typically the US dollar.
The first stablecoin, Tether, was introduced in 2014. Today there are dozens of them: a “jungle” with a market capitalization of 230-280 billion euros, according to estimates (sources: CoinMarketCap, DefiLlama), which has grown 30 times in the last five years. Tether and Circle, the largest, are worth over 200 billion dollars together. According to the Citi Institute, by 2030 this market could reach 3.700 billion dollars – as much as the GDP of the United Kingdom – thanks to crypto-friendly legislation. Donald Trump, on the other hand, has promised to make America the “cryptocurrency capital of the world”.
GEOPOLITICAL PLANE
Beyond the president’s family’s direct ties to the digital currency business, the push for stablecoins is based on a deeply geopolitical argument, which is also reflected in the Genius Act: to guarantee one-to-one parity between the physical dollar and the cryptocurrency, issuers must hold short-term US Treasury bonds as collateral. In doing so, Trump is ensuring a strong flow of purchases for US public debt, which is increasingly raising doubts about its long-term sustainability.
Stablecoins already play a significant role: in 2024, Tether bought $33 billion in US Treasury bonds, becoming the seventh largest net buyer last year. In total, Tether holds over $120 billion in Treasurys. In this way, the new US rules could “further strengthen the dominance of the dollar,” BlackRock analysts write. Through stablecoins, the Americans aim to consolidate the supremacy of the dollar in the international payment system, to the detriment of other currencies that have long been trying to gain global ground, such as the euro or the Chinese yuan.
THE SUPERMARKET EXPERIMENT
“Stablecoins have recently been gaining ground in the migrant worker remittance market and in e-commerce,” notes Valeria Portale, director of the Blockchain and Web3 Observatory at the Polytechnic University of Milan. According to her, “their value is clearly seen in cross-border payments: the mechanisms by which these exchanges are regulated are automatic, much faster and more efficient than traditional ones with bank transfers or card payments.”
BlackRock adds that “users in emerging markets may have easier access to the US dollar than their local currencies, which are often hit by volatility.”
Consumer and business adoption is still limited. “It’s difficult to use them as a means of payment in stores,” Portale says. But experiments are emerging. In August, Binance Pay and Dfx.swiss brought stablecoin and crypto payments to over 100 Spar supermarkets in Switzerland, with the goal of reaching 300 soon.
THE PROBLEM OF LACK OF TRANSPARENCY
Until now, stablecoins have mainly served as a bridge between the world of cryptocurrencies (like Bitcoin) and traditional currencies (dollars, euros). “Stablecoins were created to arbitrage crypto trading: to make life easier for traders who move capital quickly by exploiting small price differences between different exchanges to generate profits,” explains Ferdinando Ametrano, CEO of CheckSig.
The success of Tether and Circle is also linked to a more lenient regulation. “User identification is only done when dollars are converted into stablecoins or vice versa. All other transactions are carried out on the blockchain between unidentified parties. This lack of transparency has favored the use of stablecoins for illicit activities,” Ametrano adds.
Even the Bank for International Settlements has warned: “The use of pseudonyms protects privacy, but introduces problems for traceability and reporting, raising concerns about financial integrity.” Other risks that need to be taken seriously relate to “monetary sovereignty” and “financial system stability.”
An example: a sudden drop in confidence in a stablecoin would trigger a massive sell-off not only in the digital currency but also in the Treasury bonds used as collateral, which would have to be sold off quickly. A famous case is the collapse of TerraUSD, which failed due to “loss of market confidence and design flaws.” It was an algorithmic stablecoin, pegged to the dollar through a mathematical model, which many experts had expressed doubts about. This is quite different from the asset-backed stablecoins (such as Tether and Circle), which dominate today and are the only ones that will survive the Genius Act.
IN EUROPE: STRONGER RULES
What about Europe? Here the rules are stronger. In 2024, MiCAR, the European Regulation on Crypto-Asset Markets, came into force, with a transitional adaptation period covering the years 2025-2026 and which “provides a unified and clear framework for crypto-assets”, explains Marco Boldini, advisor at BonelliErede and CEO of TerraPay Italia. “The problem is that technology evolves much faster than the rules, which risk becoming outdated”, he adds. One of the conditions is to maintain liquidity as a guarantee with European banks. “A requirement considered unacceptable by some actors, such as Tether”, emphasizes Ametrano.
Moreover, the lack of a sufficiently deep, liquid and high-quality European bond market hinders their use as collateral for euro-pegged stablecoins. Europe, it seems, has chosen a different path: that of a digital euro, the future of which remains unclear. Meanwhile, private digital currencies are preparing to become increasingly competitive.
