Europe’s stablecoin debate has moved from speeches and consultation papers to live market launches. In recent weeks, Christine Lagarde warned that stablecoins have grown from less than $10 billion six years ago to more than $300 billion today, with close to 98% of the market denominated in dollars. Then, in July, Crédit Agricole’s asset-servicing arm CACEIS launched EURXT, a euro-backed token issued on Ethereum and used for a first subscription into a tokenised Amundi money market fund. Europe is no longer discussing a distant market. It is watching the next layer of payments and settlement take shape.

This makes the question of strategic autonomy more urgent. The bulk of stablecoin activity still occurs through dollar-pegged tokens issued outside the EU, while the US GENIUS law has turned the sector into an explicit instrument of dollar power and Treasury demand. At the same time, European banks are moving from internal debate to product execution, choosing infrastructure partners, building MiCA-compliant tokens and responding to corporate demand for faster, cheaper settlement outside traditional banking hours.

That combination should focus minds in Brussels. MiCA gave Europe an early regulatory framework, and the ECB is right to worry about liquidity stress, fragmented issuance and the risk of digital dollarisation. But rules alone will not determine who shapes this market. Stablecoins promise near-instant settlement, lower fees and programmable payments, but their public value depends on the architecture behind them. If Europe leaves the most scalable rails to dollar-based instruments, its regulators will end up supervising a system whose incentives are set elsewhere.

The United States has understood this faster. By setting clearer rules for reserves, issuance and compliance, Washington is giving stablecoins the legal scaffolding needed to move from crypto markets into mainstream finance. Europe has safeguards, but it still lacks a convincing euro-denominated alternative that is open enough to scale, trusted enough for institutions and decentralised enough to avoid becoming another centrally controlled payment instrument.

This landscape should force a simple question. Why is Europe still debating the risks of imported stablecoins rather than developing a credible decentralised option of its own?

There is no shortage of use cases. Stablecoins help individuals store value without relying solely on banks. For savers in countries with fragile currencies, they often provide a lifeline. For companies that move goods across borders, they reduce delays that stem from mismatched banking hours or slow clearing systems. Their programmable nature allows payments to trigger only when conditions are met, simplifying supply chains and reducing errors. They also provide a neutral unit of account for blockchain-based markets where volatility deters participation.

These advantages explain the speed of adoption. They also explain why the conversation can no longer focus exclusively on risk management. Europe needs an asset that reflects its own monetary identity. It needs an instrument that supports innovation while respecting the safeguards that distinguish the European regulatory model.

Alexandre Azoulay, managing partner of SGH Capital, has followed the evolution of digital payments across European retail, and argues that the current approach is too cautious. “Europe has tried to supervise a market it does not yet shape,” he says. “We need a digital asset that carries European values, not one borrowed from someone else’s system.”

Azoulay’s view reflects broader concerns raised in discussions within major consumer groups. When large retailers explore new payment technologies, they look for tools that reduce friction and reflect the currency in which their customers earn and spend. A decentralised euro-based stablecoin could achieve this without placing additional control in the hands of any single public authority. It could operate under transparent rules, with open protocols, broad participation and oversight that protects users without stifling development.

Lagarde’s warnings highlight a real problem. A rush by non-EU holders to redeem EU-issued tokens could strain liquidity and disrupt markets. Regulators fear that reserves held abroad could become inaccessible during periods of stress. These concerns are valid, yet they speak to the design of specific models rather than the nature of stablecoins themselves. A European decentralised stablecoin with reserves held domestically and governed by clear rules would address most of these issues. The problem is not the concept. The problem is the absence of a European version built for scale.

The European Banking Authority notes that MiCA already contains several safeguards. It calls for robust liquidity, sound governance and high levels of transparency. National regulators hold the power to enforce compliance. These tools matter, but they do not replace the need for leadership. Europe has a long tradition of turning regulation into a competitive advantage. It did so for data protection, consumer rights and payments. In each case, clear rules encouraged innovation that aligned with European norms. Stablecoins should be no different.

Azoulay frames the opportunity in simple terms. “If Europe wants to remain influential in the next generation of commerce, it needs its own digital settlement layer. Not a copy of the dollar system, not a centralised instrument controlled from Frankfurt, but a decentralised asset that strengthens the euro.” His argument is not ideological; it is practical. A decentralised stablecoin would support businesses that operate across borders, improve transparency and reduce reliance on private intermediaries. It would also reduce Europe’s exposure to regulatory shifts in Washington or geopolitical tensions that affect the dollar-based financial system.

A centralised European stablecoin, such as the model alluded to last week by Lagarde, may appear safer. Yet centralisation carries its own vulnerabilities. It creates a single point of control that can be influenced by political cycles, administrative delays or shifting institutional mandates. A decentralised structure distributes risk and can reinforce trust by limiting the scope for unilateral intervention. Users would know that the asset is governed by predictable mechanisms rather than discretionary decisions.

Europe stands at a crossroads. It can continue to manage the rise of foreign stablecoins through rules that address symptoms rather than causes. Or it can take the initiative and design a decentralised, euro-denominated stablecoin that reflects its economic weight and technological ambition. Lagarde’s intervention should encourage action rather than hesitation.

Ultimately, stablecoins are already reshaping global financial infrastructure. The question is whether Europe will shape their future or watch others do so. A decentralised European stablecoin would anchor innovation in the continent’s own values, strengthen its autonomy and ensure that the euro remains relevant in a world where digital money moves faster than traditional institutions can keep up.