A stablecoin is a digital currency, just like the Bitcoin and Ether. But there is an important difference: the value of a stablecoin is always the same. The publisher also guarantees you that you can exchange the Stablecoin at any time in the future for usually a dollar.
In order to guarantee that repayment, the publisher has a dollar in a bank account for each stablecoin or for the same amount of government bonds. The American government in particular finds the latter interesting, about which more later.
Crypto traders use stablecoins to easily change investments. Otherwise, for example, they would first have to convert their bitcoins into regular dollars to turn them into Ethers. That is more cumbersome than when it happens via Stablecoins.
In addition, international payments are being done, for example by labor migrants who send money to their families in the home country. That is cheaper and faster than via banks.
“It is also useful for companies that have to transfer large amounts abroad,” says CEO Maurice Mureau of Cryptoplatform HODL. “Banks ask for a lot of money for that and have to ask all kinds of questions with large transactions, which takes a lot of time.”
Currently there are several hundred billions of Stablecoins in circulation worldwide and more than 98 percent of them are linked to the dollar. The US is therefore very dominant in this market and can become even more dominant. Markt connoisseurs expect the number of stablecoins to increase explosively in the coming years.
To support that growth, Trump signed the so -called Genius ACT in the summer. It contains rules that must steer the trade in Stablecoins in the right direction and encourage companies to come up with stable cryptos themselves. Many American companies, including Amazon, Mastercard and Walmart, indeed have plans for this or already have such a currency.
As mentioned, such companies must purchase dollars or US government bonds for this. And the higher the demand for these bonds, the lower the interest on this. This means that the US government can borrow money cheaper. That is extra important for the US, because the country has a high national debt.
In addition, the Americans see the stable digi points as a way to strengthen the worldwide dominance of the dollar. The currency is already very present in global payment transactions. With Stablecoins, the Americans can add a little extra – to the horror of the ECB, which fears to miss the boat.
If we use more American Stablecoins in Europe, we become more dependent on the dollar and therefore also on the US dollar policy. The ECB then loses influence, because euros are becoming less important in money traffic. For example, ECB adviser Jürgen Schaaf recently warned that “European monetary sovereignty and financial stability can be eroded” if the EU does not intervene.
The influence of the US is already great. This is partly because many payment systems in the eurozone are American. Think of Visa, Mastercard and Apple Pay.
Another concern is the risks that stick to Stablecoins. The value is stable, but not 100 percent guaranteed. That became apparent when Stablecoin Terrausd crashed in 2022 because investors massively lost their confidence in the coin and sold him. An estimated 500 billion dollars (426 billion euros) evaporated in value. There is also a fear that Stablecoins will withdraw savings from banks, for example because you get interest on some coins.
ECB president Lagarde thinks at least. She pressed MEPs in the summer to make the heart of the European digital currency. Not only because of the growth of American Stablecoins, but also because she sees Trumps whimsical trade policy as an opportunity to give the euro a more prominent place in global payment transactions. The aforementioned ECB advisor Schaaf also called the e-Euro a “robust line of defense” against American Stablecoins.
The central bank has been working on the digital euro for some time, among other things to get a better grip on electronic payment transactions. Banks are often still dominant in this. The currency is not a European variant of a stablecoin, but the ECB guarantees it. This is in contrast to most other crypto coins, which are issued by commercial parties.
“The digital euro would in itself be a good alternative,” says Hodl CEO Mureau. “The advantage is that you, as a European, do not have a currency risk.” He does, however, point out that the power of the coin also depends on the ECB policy and that it will certainly take a few years before the Digi-Euro is there.
In any case, we have to wait and see if the coin will be there. In the Netherlands, among others, the intended currency receives a lot of criticism. For example, PVV and Forum are worried about privacy. In addition, there are doubts about the usefulness and need for the digital euro.
It is also not yet clear what the system behind the coin will look like. The e-Euro will be introduced in 2028 at the earliest. By that time, the number of stablecoins has probably more than doubled.
A stablecoin is a digital currency, just like bitcoin and ether. But there is an important Difference: The Value of a Stablecoin is Always The Same. The Issuer also Guarantees That You Can Exchange The Stablecoin For, Usually, A Dollar At Any Time In The Future.
To Guarantee This Repayment, The Issuer Has A Dollar in a Bank Account for Each Stablecoin or the Same Amount in Government Bonds. The American Government is particularly interested in the latter, more on that later.
Crypto Traders use stablecoins to Easily Switch between Investments. Otherwise, they would first have to convert their bitcoins into regular dollars, in order to convert them back into ethers. That is more cumbersome than when it happens via stablecoins.
In Addition, International Payments Are Made With It, For Example by Migrant Workers Who Send Money To Their Families In Their Home Country. That is cheaper and faster than Through Banks.
“It is also useful for companies that have to transfer large sums of money abroad,” Says CEO Maurice Mureau or Crypto platform Hodl. “Banks Ask a lot of money for that and have to ask all kinds of Questions for Large Transactions, which Takes a Lot Of Time.”
Currently, there are Several Hundred Billion Stablecoins in Circulation Worldwide and More Than 98 percent of them are linked to the dollar. The US is Therefore Very Dominant in this Market and Can Become equally dominant. Market Experts Expect The Number of Stablecoins to Increase Explosively in the Coming Years.
To support this growth, Trump Signed the so-called genius act in the Summer. It contains rules to ensure that trade in stablecoins runs smoothly and to encourage companies to come with stable cryptos themelves. Many American Companies, Including Amazon, Mastercard and Walmart, Do Have Plans for this or Already Have Such a coin.
As Mentioned, Such Companies Must Purchase Dollars or American Government Bonds For This. And the Higher the Demand for Thesis Bonds, The Lower The Interest Rate on Them. This mean that the American Government can Borrow Money More Cheaply. This is extra important for the us because the country has a high national debt.
In Addition, The Americans See Stable Digital Coins As A Way To Strengthen The Global Dominance of the Dollar. The Currency is Already Very Present in Global Payment Traffic. With stablecoins, the Americans can add another Layer to this – to the dismay of the ecb, which Fears Missing the Boat.
If we use more American stablecoins in Europe, we will Become More Dependent on the Dollar and Therefore also on American Dollar Policy. The ECB Will then Lose Influence Because Euros Become less important in Money Traffic. For Example, ECB Advisor Jürgen Schaaf Recently Warned that “European Monetary Sovereigtty and Financial Stability Could Be Undermed” If the Eu does not intervene.
The Influence of the US is Already Great. This is partly because many Payment Systems in the eurozone are American. Think of Visa, Mastercard and Apple Pay.
Another Concern is the Risks Associated With Stablecoins. Althegh the Value is stable, it is not 100 percent guaranteed. This Became Clear When Stablecoin Terrausd Crashed in 2022 because Investors Massively Lost Confidence in the Coin and Sold It. An Estimated 500 Billion Dollars (426 Billion Euros) in Value Evaporated. There are also your fears that stablecoins will withdraw Savings from Banks, for Example because you Receive Interest on Some Coins.
ECB President Lagarde Certainly Thinks So. In The Summer, She Urged Mps to Speed Up the European Digital Currency. Not only because of the growth of American stablecoins, but also because sees trump’s erratic trade policy as an opportunity to give the euro a more prominent place in Global Payment Traffic. The Aforementioned ECB Advisor Schaaf also Called the E-Euro A “Robust Line of Defense” Against American Stablecoins.
The Central Bank Has Been Working on the Digital Euro For Some Time, Partly to Gain More Control on Electronic Payment Traffic. Banks Are Often Still Dominant in this. The Currency is not a European variant of a stablecoin, but the ecb does Guarantee it. This is in contrast to most other cryptocurrencies, which are Issued by Commercial Parties.
“The Digital Euro Could Be A Good Alternative in Itself,” Says Hodl CEO Mureau. “The Advantage is that as a European you have no currency risk.” However, he points out that the strength of the currency also Depends on the policy of the ecb and that it will certainly take a few more years before the digital euro is available.
In any case, it remains to be seen Whether the currency will come. The Intended Currency is Receiving A Lot Of Criticism in The Netherlands, Among Other Places. For Example, PVV and Forum for Democracy Are Concerned about privacy. There are also Doubs about the usefulness and necessity of the digital euro.
It is also not yet clear what the system behind the currency will look like. The e-euro will be introduced in 2028 at the Earliest. By that time, the number of stablecoins will probably have more than Doubled.