Twelve European banks collaborate to protect the euro from digital dollarization.

In a discussion with CoinDesk, the CEO of a 12-member consortium explained why Europe is striving to transition the euro onto blockchain technology and challenge the dominance of the dollar in cryptocurrency markets.

Jan-Oliver Sell, CEO of Qivalis (Qivalis)

What to know:

• European banks caution that without a robust and liquid euro stablecoin, blockchain financial activities will default to dollar-based tokens, endangering Europe’s fiscal and digital autonomy.
• Qivalis, a MiCA-compliant euro stablecoin supported by 12 leading EU banks, aims to establish itself as the primary euro token on public blockchains, with plans for a launch in the latter half of the year, subject to regulatory approval.
• The initiative seeks to complement the European Central Bank’s envisioned digital euro, ensuring the euro maintains its status as the world’s second reserve currency amidst a growing onchain financial landscape.

Europe faces the risk of ceding control over its financial future to the U.S. dollar if it fails to integrate the euro into blockchain infrastructure, according to Jan-Oliver Sell, CEO of the bank-backed stablecoin initiative Qivalis.

This concern mirrors the increasing apprehension among European financial institutions and authorities regarding the next stage of global finance, which is becoming predominantly governed by dollar-pegged stablecoins such as Tether’s USDT and Circle’s USDC.

“Without a euro onchain that possesses sufficient liquidity, the only alternative is the U.S. dollar,” Sell stated to CoinDesk. “This poses a significant risk to Europe’s financial and digital sovereignty.”

Stablecoins have evolved beyond mere cryptocurrency; they are now integral to global financial systems, currently valued at approximately $314 billion, with projections suggesting growth to between $800 billion and $1.15 trillion over the next five years, according to a recent analysis by Jeffries.

In conventional finance, the euro represents around 20% to 25% of worldwide activity, ranking as the second reserve currency globally, Sell noted. However, its presence onchain is virtually nonexistent.

“Within the blockchain sector, the euro constitutes about 0.2% of transactions,” Sell remarked. “This reveals a significant disparity.”

Top 12 EU banks vying for stablecoin dominance

Qivalis, supported by a coalition of 12 prominent European banks, including ING, UniCredit, and BBVA, is striving to bridge this gap through the issuance of a MiCA-compliant euro stablecoin.

The initiative aims for a launch as soon as it receives regulatory approval, with Sell indicating the latter half of the year as a target, contingent on licensing processes with the Dutch central bank.

Sell mentioned that the consortium intends to create the “default” euro-denominated token for international cryptocurrency markets, effectively providing a European alternative to prevalent dollar stablecoins.

“Our goal is to be the primary issuer of euro stablecoins worldwide,” he declared. At its essence, Qivalis is establishing itself as infrastructure rather than merely a token. “We are developing the interface between blockchain and the euro,” Sell explained. “It must be accessible wherever there are use cases.”

Qivalis aims to resolve a fundamental issue that has previously hindered euro stablecoins: fragmentation.

“When several banks attempt to launch their own coins, it only exacerbates fragmentation in the market,” Sell stated. “Uniting institutions fosters the distribution and liquidity essential for usability.”

Not the ECB’s digital euro

This initiative coincides with the European Central Bank (ECB) continuing its efforts on a digital euro, projected for release no sooner than 2029. However, Sell emphasized that these two initiatives are fundamentally distinct.

ECB President Christine Lagarde recently announced that the bank has completed its phase of the central bank digital euro, now awaiting action from political entities. This project, aimed at establishing a public digital payment method, is currently under review by the European Council and the European Parliament.

Qivalis will issue a private, MiCA-regulated stablecoin, whereas the ECB’s plans are dependent on centralized infrastructure.

“We do not perceive it as competition,” Sell remarked. “It enhances the same financial framework.”

He described a “monetary stack” where central bank funds are situated on centralized systems, while blockchain-based applications, such as cross-border payments and onchain settlements, necessitate a euro-native asset on public networks.

“Currently, if you wish to operate onchain, you are effectively compelled to use the dollar,” he noted.

A race against dollar dominance

The urgency surrounding the project is linked to the rapid shift of financial activities towards blockchain-based systems — encompassing crypto trading, global payments, and decentralized finance.

Qivalis is confident that a bank-supported, regulated strategy can rival existing dollar stablecoins by fostering liquidity and integrating across exchanges, custodians, and DeFi platforms.

“We seek to construct that entire ecosystem around the euro onchain,” Sell stated.

The challenge lies not only in launching the token but also in generating demand in markets where dollar stablecoins are already deeply entrenched.

Sell highlighted currency risk as a factor that could promote euro-denominated alternatives.

“For a European user earning yields in dollars, there is an exposure to FX risk,” he noted, indicating that fluctuations in exchange rates can diminish returns.

A question of financial sovereignty

As financial activities increasingly transition onto blockchain infrastructure, the lack of a widely accepted euro stablecoin may render Europe structurally reliant on dollar-based systems.

“A potential risk is that as more transactions move onchain, without a usable euro, everything defaults to dollars,” he stated.

“We aim to construct a foundation for European digital autonomy. Without this, we will encounter dollarization.”

He reiterated that the objective is not to entirely displace the dollar but to ensure the euro remains competitive within a swiftly changing financial landscape.

“It’s about restoring the euro to its rightful position as the second global reserve currency in this domain as well,” Sell stated. “It’s about reclaiming the financial future into our hands as Europeans.”