European Banks Prepare for Tokenized Finance

European banks are accelerating their focus on stablecoins as the market expands rapidly. Since early 2025, stablecoin market value has grown roughly 50%, reaching about $310B, largely dominated by USD-pegged coins. In contrast, euro-pegged stablecoins remain tiny at ~€650M, around 0.2% of the market.

European institutions see an opportunity to move quickly under MiCAR’s regulatory clarity. A consortium of 11 European banks plans to launch a euro-pegged stablecoin via Qivalis, a Netherlands-based issuing entity targeting an EMI license in H1 2026 and a launch in H2 2026.

The structure creates a new dynamic:

- Stablecoin issuance could shift funds away from bank deposits if customers convert balances permanently into tokens.

- Banks may still earn interest income on reserve assets and institutional service fees through the joint venture.

- Deposits tied to stablecoin reserves may be treated as wholesale funding, receiving less favorable liquidity treatment than retail deposits.

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Regulators are already modelling the impact. The European Systemic Risk Board estimates that if euro stablecoins reached €130B market cap, bank LCR ratios could fall by ~4 percentage points, reflecting higher assumed runoff risk.

A deeper bank–stablecoin nexus introduces new stability considerations:

- Stablecoin runs could trigger rapid withdrawals of bank deposits held as reserves.

- Concentration limits, redemption rules, and supervisory oversight under MiCAR are intended to mitigate these risks.

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Reserve diversification may also matter. Eurozone sovereign markets currently offer limited short-term debt supply compared with the U.S.:

- Eurozone: €11.3T sovereign debt, only ~6% under 1-year maturity (~€700B)

- United States: ~$30T Treasuries, with ~22% in short-term T-bills

As euro stablecoins scale, the availability of short-term safe assets will influence how reserves are structured—and how tightly banks and tokenized money become linked.

Insights by S&P Global