The Retail Solution for Euro Stablecoins
Why Europe's digital currency future depends on retailers, not issuers
Euro stablecoins command less than 1% of a $250 billion market despite the euro representing 20% of global foreign exchange reserves. This failure stems from a fundamental business model impossibility under current European conditions, not technical shortcomings.
The mathematics reveal why. Stablecoin issuers generate revenue primarily through interest on reserve assets. Tether achieved $13.7 billion net profit in 2024, with $7 billion from U.S. Treasury investments alone. Circle earned approximately $2.1 billion in 2023 when interest rates climbed. These profits depend on a simple mechanism: holders receive no interest on their stablecoin holdings, allowing issuers to retain all returns from investing reserves in government securities yielding 4-5%.
European issuers face insurmountable structural disadvantages in this model. MiCA requires 60% of reserves in segregated bank accounts earning no interest and 40% in liquid instruments such as sovereign bonds. American competitors like Circle maintain approximately 10% in cash at banks earning 1-2% and 90% in instruments managed by BlackRock earning 5% or more. On a €1 billion stablecoin, this 3-4% yield difference creates a €30-40 million annual revenue disadvantage.
The fragmentation problem compounds these economics. America offers unified Treasury bills as risk-free collateral. European issuers must navigate German bunds, French OATs, Italian BTPs, and other sovereign bonds with varying risk profiles and liquidity levels. This fragmentation increases operational complexity and risk management costs without providing compensating revenue opportunities.
The Stablecoin Ecosystem
The stablecoin value chain comprises distinct participants, each capturing value through different mechanisms:
Issuers create and manage stablecoins, maintaining reserves and handling redemptions. They traditionally profit from interest on reserve assets. Major examples include Tether (USDT), Circle (USDC and EURC), and in Europe, Société Générale (EUR CoinVertible), Monerium (EURe), Quantoz (EURD, EURQ), AllUnity (EURAU).
Blockchain infrastructure providers supply the underlying technology on which stablecoins are built. Ethereum, Solana, and other networks charge transaction fees (gas) for every stablecoin transfer. They profit from network usage rather than stablecoin value.
Exchanges and trading platforms like Coinbase, Binance, and Kraken list stablecoins for trading. They earn fees on every trade (typically 0.1-0.5%) and often receive revenue shares from issuers for providing distribution.
Liquidity providers and market makers ensure stablecoins trade at their pegged value by arbitraging price differences across venues. They profit from small spreads multiplied across high volumes, typically earning 0.01-0.05% per transaction.
Payment processors such as Stripe integrate stablecoins into traditional commerce. They capture higher margins on stablecoin transactions (1-2%) compared to credit cards whilst offering merchants lower fees than traditional payments.
DeFi protocols use stablecoins as collateral for lending, trading, and yield generation. They earn from interest rate spreads and protocol fees, creating additional demand for stablecoins.
Each layer demonstrates different monetisation potential across the stablecoin ecosystem. Issuers depend on reserve yields. Infrastructure providers monetise usage. Intermediaries profit from transaction flows. Understanding these distinctions reveals why European conditions disadvantage certain models whilst creating opportunities for others.
Why Traditional Approaches Fail
Attempting to replicate Tether or Circle's model in Europe guarantees failure. The reserve arbitrage window that enabled their success has closed. When Tether launched, it could earn substantial spreads between zero-interest stablecoin liabilities and positive-yielding reserves. Today, established players have captured these economics at scale, creating network effects that resist disruption.
European firms cannot compete on reserve yields when starting with a 3-4% structural disadvantage. They cannot match the liquidity of tokens with $150 billion (Tether) or $60 billion (Circle) in circulation. They cannot overcome the network effects of stablecoins already integrated across thousands of protocols, exchanges, and applications.
MiCA's timing crystallised these disadvantages into permanent features. The regulation arrived after markets had already chosen winners, embedding protective measures against risks that no longer represent competitive threats whilst handicapping European entrants against established players.
The Retail Path Forward
The solution might require abandoning the reserve-yield model entirely. Instead of competing with Tether on its terms, European stablecoins need business models suited to European demands and conditions.
This is especially important because the traditional stablecoin value proposition—instant settlement and protection against currency volatility—falls flat in Europe. SEPA already processes transfers in seconds across 36 countries. As for the euro, it remains stable, unlike the Argentine peso or Nigerian naira. European users don’t need stablecoins for their original purposes.
This absence of organic demand explains why euro stablecoins struggle. But it also reveals the opportunity. Without urgent payment or currency problems to solve, euro stablecoins must offer entirely different value propositions. One promising path comes through major retailers, who already manage payments, customer relationships, and trust at scale.
Another is foreign exchange. As the US dollar declines, the appeal of holding funds in euro-denominated stablecoins increases. Traders are already looking for that optionality, and retailers around the world—especially those with euro exposure—may follow. In this context, EUR stablecoins could become a useful tool for managing currency risk and accessing a stable European asset.
Consider how Amazon could deploy a branded euro stablecoin, EURA. The retailer faces two paths: wrapping Circle's EURC for immediate deployment with proven technology, or partnering with Société Générale's EUR CoinVertible to support European financial infrastructure. A customer shopping on Amazon selects EURA as payment in exchange for 5% discounts, free Prime membership, or enhanced delivery options. The experience remains identical regardless of the underlying issuer: no wallet setup, no gas fees, no blockchain terminology. Amazon manages smart contracts and funds transaction costs invisibly.
This addresses the fundamental question of why retailers would adopt stablecoins when alternatives like SEPA Direct Debit already offer low costs. The answer lies in programmability. Unlike traditional payment rails, stablecoins enable automated refunds based on smart contract conditions, instant cross-border supplier payments without correspondent banking delays, escrow services that release funds upon delivery confirmation, and loyalty programmes with tokens that carry value beyond single merchants. These capabilities create new business models impossible with existing infrastructure.
This retail-led approach also solves adoption barriers that pure fintech solutions cannot address. With branded wrapped tokens, users never encounter crypto exchange interfaces, KYC procedures with unfamiliar companies, or concerns about private keys. They simply choose a payment option at checkout. Amazon handles blockchain complexity behind the scenes, just as it currently manages payment processing, fraud detection, and currency conversion.
The parallel with credit card adoption proves instructive. Visa and Mastercard succeeded not by convincing consumers to visit banks and apply for cards, but by embedding themselves invisibly into retail experiences. Merchants integrated card readers, banks issued plastic, and consumers used them without having to understand interchange fees or network routing. The payment revolution happened at the point of sale, not in bank branches.
Stablecoins represent the same opportunity with higher stakes. Where Visa and Mastercard charge 1.5-3% for moving digital representations of money, stablecoins can move actual digital money for 0.1-0.5%. Where card networks batch settlements daily, stablecoins settle instantly. Where chargebacks create merchant risk, smart contracts enable programmable protections.
This efficiency threatens the card networks' core business model. They extract €30-60 billion annually from European transactions through interchange fees, network assessments, and currency conversion charges. Stablecoins could eliminate 80-90% of these costs whilst providing superior functionality. The card networks understand this threat—but Visa and Mastercard's blockchain initiatives represent defensive positioning rather than innovation leadership.
Card networks will likely respond through three strategies. First, they may acquire stablecoin issuers or technology providers to control the transition. Second, they could lobby for regulatory restrictions that preserve their interchange fee model. Third, they might launch competing stablecoin products that maintain their position in payment flows. Retailers must move quickly to establish positions before these defensive strategies take hold.
Retail Distribution Advantages
The retailer provides what specialist issuers cannot: existing customer relationships, established trust, and reasons to use the token beyond crypto speculation. Amazon's 300 million active users worldwide and over €80 billion in EU revenue create immediate liquidity and network effects that no startup could replicate.
Amazon’s operation could work like this: it establishes a regulated entity under MiCA or partners with authorised issuers. Circle's EURC offers immediate liquidity on major exchanges, whilst Société Générale's EUR CoinVertible provides institutional-grade infrastructure. The choice depends on strategic priorities—American tech efficiency versus European financial sovereignty. Customers pay through familiar checkout flows without seeing blockchain details.
Behind the scenes, Amazon mints EURA, a wrapped token, by locking EURC or EUR CoinVertible with a smart contract. Amazon manages customer wallets, covers blockchain fees, and keeps technical steps invisible. For fraud protection, Amazon bears risk as with other payment methods, using its existing systems enhanced by blockchain transparency.
The issuer choice creates different value propositions. Partnering with Circle means leveraging Coinbase's distribution network and BlackRock's reserve management, but accepting dependency on American infrastructure. Working with Société Générale or other European banks offers direct TARGET2 integration, simplified euro liquidity management, and alignment with European regulatory priorities. Some retailers might use both—Circle for international operations and European issuers for domestic markets.
Other paths to adoption certainly exist. Gaming companies could integrate stablecoins for in-game economies. Gig economy platforms might use them for instant worker payments. B2B marketplaces could leverage programmable money for complex trade finance. Each model offers different advantages, but retailers possess unique scale and consumer touchpoints that accelerate adoption. In addition, in a world where the US dollar continues to weaken, global retailers may see value in holding EUR stablecoins in their treasuries.
Revenue Mechanics Beyond Yields
Retail-led stablecoins generate revenue through multiple channels that don't depend on reserve yields:
Transaction data value: Every stablecoin payment provides rich data about customer behaviour, purchase patterns, and financial flows. This data enables better credit decisions, targeted offers, and improved inventory management. For Amazon processing €100 billion annually through EURA, the behavioural data from programmable money—knowing not just what people buy but how they use embedded smart contracts—could generate €500 million in annual value through improved recommendations and inventory optimisation.
Float monetisation: Even without earning interest, platforms benefit from holding customer funds between purchase and settlement. This float can offset supplier payment terms, reduce working capital needs, and enable new financial products. A retailer with €1 billion in daily transaction volume and 3-day average float could reduce working capital needs by €3 billion, worth €150 million annually at current funding costs.
Reduced payment costs: Credit card fees typically cost merchants 1.5-3% per transaction. Stablecoin payments could reduce this to 0.1-0.5%, creating immediate savings that justify customer incentives. On €100 billion in annual sales, reducing payment costs from 2% to 0.3% saves €1.7 billion—enough to fund substantial customer incentives whilst improving margins.
Smart contract capabilities: Programmable money enables automated refunds, conditional payments, escrow services, and other features impossible with traditional rails. Each feature can carry premium pricing. Amazon could charge suppliers 0.5% for instant payment upon delivery confirmation, generating €250 million on €50 billion in supplier payments whilst improving supplier relationships.
Cross-border efficiency: For retailers operating across European markets and beyond, euro stablecoins eliminate currency conversion costs and settlement delays, creating operational savings. Eliminating 1% currency conversion costs on €10 billion in cross-border transactions saves €100 million annually.
By betting on retailers to drive adoption, the issuer shifts away from relying on yields from reserves. Instead, it earns by sharing the upside created through increased usage. The issuer provides regulatory compliance and technical infrastructure, while the retailer drives adoption and captures value through its existing business model, now enhanced by programmable money.
The Liquidity Multiplier
In addition to driving adoption, retail participation solves the liquidity problem that specialist issuers struggle with. When Amazon implements EURA for its European operations, it instantly creates a €10+ billion annual payment flow. This liquidity attracts market makers, enables secondary markets, and justifies infrastructure investment by other retailers.
The wrapped token model creates clear incentives. EURA provides benefits within Amazon's ecosystem—discounts, free shipping, priority access. Outside Amazon, holders can unwrap EURA back to standard EUR CoinVertible or EURC for use elsewhere. Suppliers receiving EURA face a choice: keep the wrapper to spend on Amazon purchases and receive associated benefits, or unwrap to standard euro stablecoins for general use.
This optionality drives adoption. A supplier might keep 30% as EURA for Amazon inventory purchases whilst unwrapping 70% for other needs. The ability to move between wrapped and unwrapped states ensures liquidity whilst preserving Amazon's ability to incentivise ecosystem participation. Other retailers implement similar programmes to remain competitive. Payment processors add support to capture transaction volume. Banks offer conversion services to meet customer demand.
The network effects compound rapidly. Once Amazon demonstrates success, competitors must respond or lose market share. If Amazon offers 5% discounts for EURA payments, Zalando, Otto, and other major European retailers face pressure to launch competing programmes. Within 18 months, Europe could have five major retail stablecoin programmes creating €50+ billion in annual payment volume—enough liquidity to establish euro stablecoins as viable alternatives to dollar dominance.
This organic growth contrasts sharply with forced adoption attempts. Rather than convincing users to download new apps and learn new behaviours, retailers embed stablecoins into existing activities where they provide clear value.
Infrastructure Requirements
Supporting adoption through any channel—retail, gaming, or B2B—requires dedicated infrastructure:
Liquidity providers maintain standing balances in both euros and euro stablecoins, enabling instant conversion at minimal spreads. They profit from transaction volume rather than speculation, creating sustainable business models.
Technical integration layers abstract blockchain complexity, allowing companies to implement stablecoins through familiar APIs. These services handle wallet management, gas fee optimisation, and blockchain selection.
Compliance frameworks enable retailers and other adopters to rely on issuers' regulatory authorisations without duplicating costly licensing processes. Clear divisions of responsibility reduce implementation barriers. Under MiCA, retailers can distribute regulated stablecoins without holding an e-money licence, as long as they partner with an authorised issuer. This setup, much like how merchants accept credit cards without becoming banks, supports wider adoption.
Interoperability standards ensure branded stablecoins remain fungible and transferable across retailers and use cases, preventing fragmentation while allowing differentiation.
The Path Forward
MiCA provides the regulatory foundation. Technical infrastructure costs have decreased dramatically. Major retailers face mounting pressure to reduce payment costs and differentiate offerings. These conditions create openings for new distribution models.
Success requires recognising that traditional financial institutions may not drive payment innovation. Credit cards succeeded because merchants integrated them into checkout flows, not because consumers demanded new payment methods. PayPal grew through eBay integration before expanding broadly. Mobile payments gained traction through Apple and Google's device integration, not standalone wallet apps.
Euro stablecoins need similar integration into existing user behaviours. Several paths could work:
Retailers focusing on payment cost reduction and customer incentives represent one promising avenue. Their scale and existing payment flows create natural adoption drivers.
Gaming platforms could leverage stablecoins for cross-border in-game economies, solving real friction in virtual goods trading.
Gig economy platforms might use instant settlement to improve worker satisfaction and reduce float management costs.
B2B marketplaces could implement programmable trade finance and cross-currency foreign exchange, automating complex multi-party transactions involving multiple currencies.
For any path to succeed:
Issuers should focus on infrastructure and compliance while actively courting distribution partners across sectors. Revenue models must accommodate diverse economics rather than depending solely on reserve yields. Multiple issuers demonstrate viable strategies. Circle's EURC provides immediate technical capability whilst seeking distribution partners. Société Générale's EUR CoinVertible leverages banking infrastructure for institutional clients who could become retail distributors. The competition between American efficiency and European integration benefits retailers, who can negotiate better terms and choose partners aligned with their strategic priorities.
Potential adopters (retailers, gaming companies, marketplaces) should evaluate stablecoins as tools for solving specific business problems—whether payment costs, settlement speed, or programmability needs. The business case must stand independently of crypto speculation. A 1.7% reduction in payment costs or 3-day improvement in settlement speed justifies adoption regardless of blockchain ideology.
Regulators should enable diverse distribution models through clear frameworks that recognise different use cases. Overly restrictive interpretations that favour traditional banking channels will push innovation offshore. Regulators have confirmed that stablecoin distributors don’t need separate licences when working with authorised issuers. This is a positive step. However, more flexibility is still needed in how distributors can earn revenue and interact with customers.
Investors should evaluate euro stablecoin ventures based on distribution partnerships and adoption mechanics rather than technical features or reserve management strategies alone. A stablecoin issuer with committed retail distribution partners has more value than one with superior technology but no path to users.
The choice between American and European issuers involves trade-offs beyond technical capabilities. Circle offers proven scale, global liquidity, and integration with dollar-dominated crypto markets. European bank issuers provide regulatory alignment, potential government support, and reduced foreign exchange risk. Retailers might start with Circle for speed, then transition to European issuers as they scale—or maintain both to optimise for different use cases. The key is beginning distribution regardless of issuer choice, as switching costs remain low in the early stages.
All in all, the traditional stablecoin model of parking reserves in government bonds cannot work in Europe. But Europe's sophisticated consumers, capable businesses, and comprehensive regulation create conditions for different models. Whether through retail integration, gaming economies, or B2B innovation, euro stablecoins can capture meaningful market share by solving real business problems rather than chasing yield differentials.
The infrastructure being built now will determine payment systems for the next decade. European companies (or European subsidiaries of US companies) that identify and exploit specific use cases can establish positions in programmable money that provide lasting competitive advantages. Those waiting for perfect conditions will find themselves dependent on whatever systems others create.
Time to build the business models that work with European realities rather than against them.
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Recommended in the euro stablecoin space:
Ex-ECB Official Urges Europe to Back Euro Stablecoins or Risk Losing Financial Power (Francisco Rodrigues, CoinDesk, 5 July 2025)
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ECB president Christine Lagarde says stablecoins will lead to the ‘privatization of money,’ undermining central bankers ‘public good’ (Paolo Confino, Yahoo! Finance, 2 July 2025)
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👋 About Us | We advise firms—including banks and infrastructure providers—operating in the stablecoin and digital asset space. Some of this work is subject to confidentiality agreements, so we cannot name clients or disclose details. We keep a clear line between our advisory work and editorial output, and we avoid publishing material that would create a direct conflict of interest. Nothing in this publication should be taken as investment advice. We also take part in private briefings, board sessions, and public speaking engagements across the sector. Some of these are paid.
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