Quick Breakdown:
- Stablecoins are evolving into tools of global monetary power, not just crypto stability.
- The U.S. leverages dollar dominance and new laws, China advances with the e-CNY, while Europe bets on MiCA regulation.
- Liquidity, stablecoins regulation, and geopolitics will decide which currency dominates cross-border payments.
Can Europe’s MiCA Compete with U.S. and China’s Approaches?
When a freelancer in Lagos gets paid in minutes from a client in London, or a family in Argentina shields their savings from inflation, it’s often thanks to stablecoins. Beyond market talk, they’ve quietly become the lifeline of digital finance, offering stability in a volatile crypto world and a cheaper way to move money across borders.
The contest is no longer just about adoption but also about monetary power. The United States, the European Union, and China are racing to set the rules and standards for stablecoins, and their decisions will shape the future of money itself.
Europe’s answer is the Markets in Crypto-Assets Regulation (MiCA), adopted in 2023 and partly in force by mid-2024. MiCA is one of the world’s first unified stablecoins regulation frameworks. It requires issuers to hold reserve assets, invest them in low-risk instruments, guarantee redemption at par and comply with strict oversight, disclosures, and consumer protection measures. On paper, this provides stability and trust.
Yet regulation cuts both ways. MiCA’s high standards create safety, but many think its rigidity may stifle innovation. Startups and smaller issuers could struggle under the heavy compliance burden, especially when compared to the looser, more flexible approaches taking shape in the U.S. and Asia.
The U.S. has strengthened its position with the GENIUS Act, signed into law by President Donald Trump in July 2025. Coupled with the enduring dominance of the dollar, this law aims to turbocharge the appeal of dollar-backed stablecoins. Some analysts even warn that it might accelerate deposit outflows from Europe, weakening the EU’s hopes of establishing the euro as a credible stablecoin player.
China, meanwhile, is charting its own state-led path. By mid-2024, its digital yuan (e-CNY) had already processed transactions worth nearly CNY 7 trillion ($986 billion). Reports in late 2025 suggest cities in China may soon introduce a state-backed yuan stablecoin tailored for cross-border settlements, a direct bid to challenge dollar supremacy and expand the yuan’s influence across Belt and Road trade corridors.
Against this backdrop, Europe faces a steep climb. MiCA promises clarity and protection, but in a world where both the U.S. and China are actively weaponizing their currencies, the euro’s place in the stablecoin wars remains uncertain. Can it hold its ground, or will it be overshadowed by financial giants with greater global leverage?
Is the EU Prepared for a Global Liquidity Battle?
European Central Bank (ECB) President Christine Lagarde has consistently warned that Europe cannot afford complacency in the face of rapid financial innovation. Stablecoins, she argues, may look modern but recycle old risks—particularly liquidity risk. Issuers promise instant redemption at par while often holding investments in riskier assets, echoing vulnerabilities that once triggered runs on money market funds.
MiCA seeks to reduce this danger with rules on redeemability and robust reserves. Still, Lagarde points to gaps. One of her chief concerns is multi-issuance schemes, where EU and non-EU entities jointly issue fungible coins. In a crisis, investors would likely rush to redeem from the EU arm, overwhelming its reserves and amplifying liquidity stress.
Her prescription is unambiguous: Europe must close loopholes, enforce equivalence with other jurisdictions, and push for global coordination on stablecoins regulation. Otherwise, it risks becoming the “weakest link” in a worldwide stablecoin system. Strict rules may inspire trust, but without liquidity support, euro stablecoins could fade into irrelevance in a market already dominated by the dollar stablecoin ecosystem.
Dollar vs. Euro vs. Yuan: Which Stablecoin Standard Will Dominate Cross-Border Payments?
The real battlefield for stablecoins isn’t in speculative trading; it’s in cross-border payments. Today, sending money across borders through traditional banking rails is notoriously slow and costly. According to the World Bank’s Remittance Prices Worldwide database, the global average cost of sending remittances still hovers around 6.49% of the amount sent.
For millions of migrant workers and businesses navigating global trade, these costs add up to billions of dollars in lost value every year. Stablecoins offer a tantalizing alternative: near-instant, low-cost transfers that bypass intermediaries. Whoever manages to set the global standard in this space won’t just win bragging rights; they could command enormous financial flows and reshape the future of international finance.
RELATED: The Global Remittance Market: How Web3 Startups are Disrupting Money Transfers in 2025
For now, the dollar has the upper hand. Dollar-denominated stablecoins, particularly USDT and USDC, dominate the stablecoins list, together accounting for more than 85% of global stablecoin market capitalization (CoinMarketCap, Sept 2025).
This overwhelming liquidity advantage means that the dollar stablecoin ecosystem is already the de facto standard for crypto payments, remittances, and DeFi transactions worldwide.
Europe, meanwhile, faces an uphill battle. Despite the EU’s bold step with MiCA regulation, euro stablecoins remain niche players. Take EURC: its market capitalization sits just above $200 million, a drop in the ocean compared to the $160+ billion commanded by USDT alone. Unless European banks and payment giants fully embrace tokenization and begin to actively back euro-pegged stablecoins, the EU risks being sidelined in the stablecoins list of top players.
China’s strategy is different altogether. While capital controls currently limit the yuan’s free movement, Beijing’s ambitions are unmistakably geopolitical. If a state-backed yuan stablecoin emerges, especially one linked to its Belt and Road Initiative trade corridors, it could bypass Western financial infrastructure entirely. In regions where China already dominates trade financing, such as parts of Africa and Southeast Asia, a digital yuan could gradually erode the dollar stablecoin’s grip.
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In short, the fight for stablecoin dominance in cross-border payments isn’t just about technology but also about liquidity, stablecoin regulation, and geopolitics. The dollar may lead today, but both the euro and the yuan stablecoin are competing for tomorrow.
Conclusion: The Future of Monetary Power Is on the Blockchain
As it stands, the stablecoins war extends far beyond crypto; they are about who controls the global future of money. The U.S. enjoys a massive liquidity advantage and strong first-mover momentum. China is betting on state power and strategic expansion. Europe, meanwhile, is relying on MiCA to build trust through clarity and protection.
To challenge the dollar’s supremacy, the euro and yuan must achieve deep market integration, strong liquidity, and broad user adoption. Until then, data leaves little doubt: the digital dollar is defining the rules of the next financial era.
Disclaimer: This piece is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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