The Summer That Changed Everything
Stablecoins have now moved from crypto curiosity to monetary statecraft
After five weeks away, we return to find the stablecoin landscape transformed. The summer of 2025 will likely be remembered as the moment when digital assets moved from the periphery to the centre of global monetary policy. From Congress passing the GENIUS Act to the European Central Bank finally stirring on digital euro infrastructure, the pieces of a new financial architecture are falling into place.
This edition marks an evolution for Euro Stable Watch. We're introducing a dual-voice format that captures the debate and nuance these developments deserve—you'll find us (Marieke and Nicolas) engaging directly with the news that shaped the summer, offering different perspectives on the same seismic shifts. Moving forward, we'll alternate between this conversational analysis, our traditional single-voice pieces, and interviews with founders and key players building the stablecoin ecosystem. If you know someone we should speak with, please send suggestions our way.
The stakes have never been higher for Europe. While Washington deploys stablecoins as instruments of monetary statecraft and Asia races ahead with innovative regulatory frameworks, European policymakers remain caught between caution and irrelevance. The window for meaningful action narrows with each passing week.
Our analysis of eight key developments below reveals a world where the money stack is being rebuilt in real time. Some stories signal genuine progress, others highlight the risks of moving too slowly. All point to the same conclusion: the next phase of global finance is taking shape now, and Europe's position in it remains uncertain.
As always, our full resource list appears at the end, now behind our paywall. If you find this analysis valuable, please consider supporting our work with a subscription. The conversation about Europe's stablecoin future needs informed voices—and that requires sustainable coverage.
What follows are our reflections on the summer that changed everything.
1️⃣ US Congress advances pro-crypto legislation during Crypto Week
In July 2025, Congress made significant progress on digital asset legislation during “Crypto Week.” The GENIUS Act was signed into law by President Trump, establishing the first comprehensive federal regulatory framework for payment stablecoins, while the House passed the CLARITY Act with bipartisan support (294-134), which would divide regulatory oversight of digital assets between the SEC and CFTC. The legislative momentum signals growing bipartisan recognition of the need for clear digital asset regulations to foster innovation while protecting consumers. (Reuters)
Marieke: There is no doubt that in a few decades when we look back the GENIUS Act will be seen as a historical turning point for the US and for the world. A new sort of Bretton Woods moment.
And while it looks like things moved fast, we should not ignore the fact that many industry players such as Circle had been lobbying for years for better, fairer regulation in the US. Jeremy Allaire’s recent interview in Semafor is a good example of what it took to get the industry to this place.
Following GENIUS passing we’ve seen a rush and an acceleration of stablecoins regulations across the world. What we are witnessing is a redesign of the money stack, and what I find fascinating is that no two countries have the same approach. For example the UK is prioritising tokenised deposits, in Europe the ECB works on a wholesale and a retail CBDC, China which has a CBDC is now introducing a stablecoin via Hong Kong. I recently wrote about this fragmentation, surely a bit of international coordination is needed?
Nicolas: The history of financial markets from 1971 to 1986, from the Nixon Shock—which ended Bretton Woods—to the London Big Bang of 1986, marked a dramatic reset of our financial system. I expect a similar reset over the coming decade, with full tokenisation of financial markets, ultimately driven and enabled by regulators, underpinning this new shift.
If we had to date the start of this iteration—today’s equivalent of the Nixon Shock—I agree that 2025 definitely feels like it: it’s the year of the ‘Trump Shock’! But to me the package includes more than the GENIUS Act: America turning away from global trade, the dollar sliding sharply, and the looming debate over Fed independence. Much of it is chaotic, as Liberation Day showed, and it is fair to ask whether a coherent plan exists at all.
With this caveat, I agree with Marieke that the GENIUS Act is a key milestone. Passing the full US legislative process—approval by both houses of Congress and months of lobbying—it represents the most structured step in this new reset. Laws endure. Majorities may shift, enforcement may vary, but the foundation remains.
As stablecoins are largely a USD phenomenon, the GENIUS Act may have arrived later than the EU’s MiCA, but it will likely have greater impact, set a global benchmark, and outlast any other regime. Anyone interested in euro stablecoins should consider it—not necessarily as a model, but as a point of comparison.
2️⃣ ECB considers issuing the digital euro on a public blockchain
In August, the European Central Bank confirmed it is weighing the option of launching the digital euro on a public blockchain such as Ethereum. The move aims to boost transparency, interoperability, and resilience of euro-denominated digital money, marking a shift toward open infrastructure. (FT article)
Nicolas: Everything has been moving so fast with stablecoins. By 2021–2022, they were marginal and little known: tokens that didn’t fluctuate and that you could use to buy crypto assets. But by 2025, the acceleration has been staggering: widespread media coverage, Circle going public, the GENIUS Act passed, and every bank and financial institution forced to take a position and start implementing.
In this context, it is worrying to see the ECB moving at such a deliberate pace, and in a direction that actively discourages stablecoin use in the eurozone. CBDCs were all the rage two or three years ago, but now that the US has moved in an entirely different direction—unleashing the innovative power of the private sector instead—an upgrade is long overdue.
There are many concerns: the lack of coverage for euro stablecoins, which we are trying to address with this newsletter, and above all the ECB’s stance. While it issues statements on the importance of monetary sovereignty and the euro’s potential as a reserve currency, it does not appear to study or even acknowledge the role stablecoins could play in achieving those goals.
Given this, it is hard to interpret the ECB’s latest move. On one hand, something is finally happening—at least a sign of life! On the other hand, it is still not moving in the right direction—which would consist in opening a long-overdue debate about making the ECB’s digital euro a complement, rather than a substitute, for euro stablecoins. Is the fortress starting to crack? Will we finally have that debate?
Marieke: This headline certainly made a lot of noise in my circles—was the ECB now planning to directly compete with stablecoins? I agree with Nicolas that it’s hard to interpret this last move. But the lack of details or the confusion surrounding the ECB’s plan are rather in my opinion an indication that there is no clear plan.
At a recent ECON European Parliament hearing, Member of the ECB's Executive Board Piere Cipollone actually addressed this news and said that the journalist was confusing the wholesale CBDC with the digital euro. Having worked a lot with journalists, my simple rule in life is that it’s rarely the fault of the journalist but often the fault of the messenger—if the message is not crystal clear it can’t be articulated back.
To be honest I am still not sure what the digital euro is about. Is it purely for retail use? Is it for both retail and wholesale? Or will the ECB also provide a wholesale CBDC? How does the ECB envisions the future stack of money? What role will it play? What role should banks and Fintech play? Many of us have tried to get in touch with the ECB to clarify its positioning, but to no avail. It would be good to have an open discussion about those complex topics.
3️⃣ Stripe and Circle unveil dedicated Layer-1 blockchains for stablecoins and Google resurfaces its own Layer-1
Stripe and Circle each announced plans to launch their own Layer-1 blockchains—Stripe’s Tempo and Circle’s Arc—designed specifically for tokenised assets. These platforms aim to give the issuers control over settlement infrastructure and support stablecoin scaling. Google followed the announcements and resurfaced its own Layer-1 GCUL in a LinkedIn post that went viral.
Marieke: I think those are fascinating developments. There are hundreds of Layer-1s, and yet here we get new ones. Layer-1s are settlement layers and while many versions exist, the reality is that the speed and levels of privacy required by large institutions such as banks might sometimes not be met.
I’ve always thought that in one way or another everything would converge to Ethereum—after all it’s open source, permissionless and decentralised, and whatever additional privacy, speed is needed can be built on top. Maybe I’m wrong.
Seeing large players such as Stripe, Circle and Google build their own Layer-1s is also interesting in terms of approach. Most blockchains have been built tech first and then the ecosystem came on top. But the players we have here (Stripe, Circle, Google) already have large ecosystems and are now building a Layer-1.
But ultimately I think this move is more about “owning the customer” and a realisation that to own the stack and monetise, you need to own transactions and customers’ data.
Nicolas: This is all very interesting, indeed. The crypto world has gone through many phases: first, everyone was launching their own Layer-1 protocol; then, there seemed to be a convergence around a handful of those, with innovation moving to the upper layers—Layer-2, where scaling, interoperability, and additional features are developed. These new announcements suggest yet another shift in the opposite direction: large, well-funded companies deciding to build their own “neutral” Layer-1 protocol for payments.
It is hard not to be reminded of the now-defunct Libra/Diem protocol once launched by Facebook (I wrote about it at the time). The rush is understandable: just like with Visa and MasterCard, there is room for one, maybe two players at most in this market, and the race to win will be costly and exhausting.
I’m not surprised to see Meta absent—burnt by past experience and lacking the trust required. Stripe, on the other hand, seems well positioned: a core payments business, a global cross-border footprint, some distance from the US political economy (partly European, with European founders), and an early, genuine interest in stablecoins, as shown by its recent acquisition of Bridge.
This battle will be fascinating to watch. Done right, this could even provide an opportunity to propel adoption of euro stablecoins!
4️⃣ Major regulatory and market developments in Asia’s stablecoin scene
August saw Hong Kong enact its Stablecoin Ordinance—including licensing, reserve and AML requirements—prompting Standard Chartered, Animoca Brands, and HKT to form Anchorpoint Financial to apply for issuance. In Japan, JPYC became the first FSA-registered stablecoin issuer under the funds-transfer regime. Meanwhile, China began exploring yuan-backed stablecoins to support global adoption of the renminbi.
Nicolas: All very interesting, for at least two reasons.
First, East Asia has long been a hotbed of financial innovation. Tokyo and Hong Kong emerged early as key financial centres. Sure, they were later diminished by Japan’s recession and the political crackdown in Hong Kong, which gradually shifted China-centred finance toward Shanghai. But now, both Tokyo and Hong Kong could be back in the game, contributing innovation that the Western financial world, mired in its own problems, seems unable to deliver on its own.
The second reason is that the global economy is far more Asian than it was during 1971–1986. China was then barely present on the global stage, shaped by isolation and the legacy of the Mao era. Southeast Asia had only begun its economic rise, which has since turned countries like South Korea, Indonesia, and Malaysia into some of the most dynamic economies in the world.
If stablecoins are a key component of the current financial reset, I would not be surprised to see major developments in the East. Anyone interested in stablecoins should pay close attention to what is happening there, including in China.
Marieke: To me that’s a direction that can’t be overlooked. Things are moving across the globe and fast. Digital payments rails are an opportunity to rewire the financial system and for markets such as China to re-position its currency in the global market. Seeing that speed should create a sense of urgency for Europe: the stack is being rebuilt, we need to act now to have a chance to be relevant.
5️⃣ Bo Hines joins Tether as U.S. ambitions grow
In August, Tether hired Bo Hines, a former congressional candidate and White House policy advisor, into a senior role as it prepares to launch in the US. His appointment signals Tether’s push toward regulatory compliance and a greater institutional presence in America.
Marieke: Tether is a fascinating business. From rumours to colourful backgrounds, the archrival of Circle is making bold political moves. Tether’s approach in Europe and the US is very different.
In Europe Tether has openly chosen to not become MiCA compliant and is instead backing startups with potential (like Quantoz).
In the US, Tether has strong ties to Cantor Fitzgerald, the Wall Street firm formerly led by Commerce Secretary Howard Lutnick. In addition, based on their Q2 2025 attestation report, Tether holds $127 billion in US Treasury bills, making them the 18th largest holder of US Treasuries globally, surpassing sovereign lenders such as South Korea.
Tether is now talking about doing a GENIUS regulated stablecoin and appointing Bo Hines, who until recently was advising the White House on all things crypto.
This disparity raises a question: why Tether, built mostly by Europeans is “abandoning” Europe and going all in on the US?
Nicolas: Tether is indeed a fascinating mystery. Journalist Zeke Faux of Bloomberg even wrote an entire book (Number Go Up) asking why it still exists and hasn’t collapsed. Its survival suggests many things, but one is clear: Tether has built a stablecoin infrastructure that has become essential in parts of the world, and in the process has become one of the largest holders of US treasury bills, deepening its ties with the American government.
Now we see the result of Tether’s rise. Poaching Bo Hines, Trump’s own junior crypto advisor, shows how serious they are about establishing a foothold in the US and building a strong business there. There was a brief period when Tether’s decision not to play under the GENIUS Act, combined with Circle’s meteoric rise, suggested that Tether might fade into irrelevance at the unregulated margin of the new stablecoin world. Well, not so fast—we’ll see where this goes.
6️⃣ Erebor launches as a “stablecoin bank” backed by Thiel and Luckey
The new venture Erebor, backed by Peter Thiel, Joe Lonsdale and Palmer Luckey, debuted in August as a regulated US “stablecoin bank.” It aims to offer stablecoins and tokenised deposits, positioning itself to compete with both fintech firms and traditional banks over digital settlement services.
Nicolas: Details are scarce on this one—coverage is essentially limited to a few articles, one in the Financial Times, another in American Banker, and a third in Wired—but I was intrigued enough to dedicate an entire edition of my newsletter, Drift Signal, to it. In short, I see Erebor as an attempt to create the US equivalent of Japanese trading houses, supporting the domestic industrial sector in its efforts to export.
The project aligns closely with the Trump agenda, combining stablecoins with reindustrialisation and efforts to reverse the trade deficit, so it is no surprise that Peter Thiel is the main backer. It may fizzle, crash against regulatory hurdles, or fail from trying to do too much at once. Even so, Erebor should display early experiments in how stablecoins can reshape financial services and markets more broadly. It will be very interesting to watch.
Marieke: In addition to the points made by Nicolas I think it’s also worth noting that the banking industry has always been at odds with the crypto industry especially in the US, often refusing to bank its businesses (“Operation Chokepoint 2.0”).
Things are changing, but there is still a lack of banking partners, or crypto first banks and this is a weak point for the industry. What better answer than launching a crypto first digital bank? Definitely one to watch!
7️⃣ Economists, including Jean Tirole, sound alarm over systemic risks of stablecoins
Economists ramped up warnings in August. Nobel laureate Jean Tirole cautioned that poorly regulated stablecoins could trigger runs, reserve mismatches, and bailouts funded by taxpayers—calling for stricter oversight, clearer reserve requirements, and tighter issuer governance.
Marieke: While I agree that caution should be exercised and risks need to be thought through, I do worry when I see in particular high ranked Europeans advocate for stricter rules.
The risk we face here is seeing the euro being marginalised and the world’s dollarised. The GENIUS act in the US is about enabling innovation and free enterprise. What Jean Tirole is advocating for is more control and more barriers. Make our pond smaller. But how much can things really be tightened up until they become unusable? And is it reasonable to think that you can prevent Europe from being flooded with USD stablecoins? Users will use whatever is simpler, more accessible. If we have no euro alternatives, our loss.
To make a sports analogy, a default answer to an offensive play is a strong defense. But on the sports court as in life, you can’t just keep defense, you also need to play offense to win a game. Time for Europe to play offense!
Nicolas: From the first day I started reflecting on stablecoins—thanks to Marieke—I immediately thought: “This is where the next financial crisis could originate.”
That said, it’s not a reason to discard stablecoins entirely. Many critical innovations are initially misunderstood and poorly regulated. They can unravel, sometimes dragging the wider economy down, before the dust settles and we understand them well enough to craft the right regulatory framework. Credit default swaps, for example, arguably triggered the Great Financial Crisis, yet today they are widely used and improve risk distribution across financial markets. The same could happen with other financial innovations.
What makes this particularly interesting is that respected economists now echo this concern. Jean Tirole is a notable example: a Nobel laureate, French, and generally seen as ideologically neutral, whose caution on stablecoins carries weight. Others, including Paul Krugman and FT columnist Rana Foroohar, have voiced similar warnings. Euro Stable Watch has also contributed to the debate in two instalments (links below)
Overall, I agree with Marieke that the specter of a stablecoin-induced crisis should not lead Europe to do nothing or play defense. Quite the opposite: the best way to prevent such a crisis, or to shield Europe from it, is to take an active stance on stablecoins and experiment and build as much as we can while it is still early. The ECB should take note!
8️⃣ Scott Bessent frames tariff-for-investment strategy as a “sovereign wealth fund”—feeding stablecoin markets
In an August Fox Business interview, Treasury Secretary Scott Bessent revealed the Trump administration’s trade policy ties tariff relief for foreign allies to direct investment—primarily in US manufacturing—creating what he called a $10 trillion “sovereign wealth fund” through allied investments in sectors like semiconductors and steel. This inflow of global capital could bolster the liquidity and stability of the U.S. dollar—crucial underpinnings for the credibility and scalability of dollar-pegged stablecoins.
Nicolas: This is more context than pure stablecoins, but it highlights how much the US depends on foreign capital to keep its economic engine running—and to fund its staggering national debt. It is even more critical now: yes, foreign investors are still attracted to US assets, but that may not last—because Trump is erratic, because the dollar is volatile, and because other regions are becoming more dynamic. As a result, there is a sense of panic in Washington that explains a lot.
In particular, it explains the goal of flooding the world with stablecoins as a means of payment, which will push issuers to buy more and more US treasury bills, funding the national debt. It also explains the blunt framing Bessent recently used on Fox News: for net exporters like Japan and the EU, access to the US market now comes with the expectation of reinvesting a large part of their trade surplus in the US, preferably in projects earmarked by Trump himself! European companies and taxpayers may find this idea bizarre, but the message is clear: the US needs capital more than ever, and stablecoins are one tool to secure it.
Marieke: To me Bessent's tariff-for-investment strategy also shows that the Trump administration sees crypto as a weapon for US monetary dominance, not a threat. That “$10 trillion sovereign wealth fund” from allied investments? It's building the foundation that makes dollar-pegged stablecoins work at scale.
Stablecoins are a massive demand engine for the US Treasuries—every major stablecoin needs dollar reserves, mostly government bonds, to maintain their peg. With $150+ billion in stablecoins requiring Treasury backing, that's built-in, structural demand for US debt.
The administration isn't just crypto-friendly for innovation—they're weaponising digital assets for global monetary control. Allied manufacturing investments strengthen the dollar foundation, making stablecoins more credible globally, which drives more Treasury demand, which enhances dollar dominance.
It's a perfect cycle: stronger dollar → better stablecoins → more global adoption → higher Treasury demand → reinforced dollar hegemony.
The crypto agenda isn't some side project—it's monetary statecraft disguised as financial innovation.
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