Les Echos Opinion Piece: A Crypto-Euro Issued by an American Giant, or How Europe Is Ceding Its Monetary Sovereignty

The plunge in crypto asset prices has been the subject of much discussion, overshadowing a development that should, in fact, concern us all far more than yet another market fluctuation. On June 16, the American company Circle—the world’s second-largest issuer of stablecoins—announced the launch of EUROC, a crypto asset backed by the euro. This announcement is all the more significant because it highlights two major gaps: the lack of euro-denominated stablecoins available on the market and the lack of European players to issue them. Circle is thus stepping into this gap, following global leader Tether, which had already unveiled its EURT in 2021.

I therefore appeal to public policymakers. How many more years—and how many more foreign cryptocurrencies—will it take before Europe decides to support its own leaders?

While some still view cryptocurrencies as volatile assets that cannot be trusted, stablecoins—whose value is pegged to a fixed exchange rate with a fiat currency—are emerging as a key instrument in this new economic landscape. Between the unprecedented proliferation of payment methods in the digital world and the creation of new economic spaces such as disintermediated finance, they are paving the way for numerous applications that will make our daily lives easier.

Let’s not lump all cryptocurrencies together. Let’s not lump all cryptocurrencies together

Let’s not pick the wrong enemy. Let’s not confuse the issues. Not all stablecoins will collapse just because Terra’s UST has made headlines.

First, for technical reasons, since stability can be achieved in various ways. Some, like Cicle, set aside an equivalent amount of fiat currency for each stablecoin issued. Others, like Terra, use an algorithm to maintain this stability.

For governance reasons, on the other hand. Terra’s falsely decentralized decision-making mechanism lies at the heart of the failure to provision UST, which led to the collapse of its price. Other, more decentralized stablecoins weathered this market crisis.

We cannot, therefore, use this event as an excuse to brush aside the consequences of Circle’s announcement while effectively giving up on the future of our monetary sovereignty.

The European regulation that is about to be adopted cannot be guided solely by the example of a bankrupt company. Nor can it be merely a reflection of a conservatism that ultimately undermines our common goal: preserving Europe’s economic and monetary strength. For while the European Central Bank is right to consider issuing a digital euro, its launch is not expected for several years, and the features it will have are far removed from the innovation and agility promoted by private-sector players.

When will we see stablecoins created by and for Europeans?

This observation should underscore the urgent need to encourage the development of robust and secure companies that meet user expectations while complying with European policies. Better yet, encouraging the development of stablecoins would help cement the euro’s dominance in international trade.

If we fail to do so, we face a serious threat. The United States will issue the digital world’s euros in our place. More than 99% of stablecoins in circulation are already pegged to the dollar. American monetary hegemony is thus being reestablished in Web3—and, consequently, in the economy of tomorrow.

This is what is at stake. Cryptocurrencies are a fundamental part of the emerging digital economy. As a cornerstone of Web3, their goal is simple yet powerful: to enable anyone to own and exchange value or scarcity (from money to art) online.

Yet Europe is not betting on euro-pegged stablecoins. This is evident in the proposed European MiCA regulation, which is set to prohibit our companies from issuing euro-pegged stablecoins exceeding a value of 200 million euros and one million transactions per day. How, then, can we compete with dollar-pegged stablecoins, which have a circulating supply of $69 billion for USDT and $55 billion for USDC?

By choosing this path, we may take pride in our regulation—which is certainly groundbreaking—but it will dash any hopes of a resurgence in Europe’s economic power on the global stage, particularly in the digital sector. Worse still, as it stands, the regulation will not protect European citizens from potential failures by foreign entities that will be able to provide them with euro-denominated stablecoins without restriction.

There is still time to take action! To strengthen our sovereignty, protect consumers, protect the environment, and combat financial crime, there is one prerequisite: we need companies in Europe that uphold our values.

Read the article: https://www.lesechos.fr/idees-debats/cercle/opinion-cryptos-la-souverainete-europeenne-en-danger-1415292