Stablecoins as a means of payment: innovation, risks and regulation

By Pierre E. Berger, Esperanza Morales, Joris Latui LL.M., DLA Piper

1.Introduction

Stablecoins are crypto-assets designed to maintain a stable value relative to a reference asset, usually a fiat currency such as the US dollar or the euro. Their market has expanded rapidly, with global capitalization surpassing USD 300 billion by September 2025.[1] It remains, however, dominated by dollar-denominated coins. This rapid expansion has made stablecoins a focal point in debates about the future of money and payments. 

This article explores stablecoins as a means of payment by reviewing their use cases, the risks highlighted by regulators, the European regulatory framework and the contrast with the more lenient US approach. The central question is whether stablecoins can gain a secure role in Europe's payment system, or whether restrictive policies risk leaving the euro behind in the digital era. 

2.Use cases – stablecoins as an efficient means of payment 

Stablecoins have a wide range of potential use cases that extend beyond crypto markets, where they are already widely used to trade digital assets and enhance financial inclusion. Beyond this, their potential as a payment instrument is gaining attention. Stablecoins can serve as a fungible means of payment if they ensure settlement finality, interoperability with other systems, and convertibility into central bank money.[2]

Compared to traditional payment rails, which can take several days and involve multiple intermediaries, stablecoins enable near-instant settlement. Additionally, digital compliance tools and smart contracts allow for automated AML/KYC checks and sanctions screening, making transactions faster and more efficient. With applications ranging from merchant payments to remittances and government disbursements, stablecoins address the growing demand for real-time, low-cost, and inclusive payment solutions.[3]

3.Risks and concerns 

While stablecoins hold promise as efficient payment instruments, European regulators stress the risks they pose to financial stability and monetary sovereignty. The ECB highlights vulnerabilities linked to confidence and reserve adequacy: doubts over collateral quality or issuer solvency can quickly trigger “runs,” similar to money market fund crises, with potential spillovers to banks holding stablecoin deposits. Operational risks such as cyberattacks and illicit use (money laundering or sanctions evasion) add to the concerns.[4]

The ESRB warns that stablecoins still lack key attributes of sound money, notably singleness, elasticity, and integrity, limiting their ability to scale in payments. Market concentration is another issue: USD-denominated stablecoins dominate, creating dependence on a few issuers outside the EU.[5] 

4.Regulatory framework in Europe 

A regulatory complication arises from two parallel regimes that shape the treatment of stablecoins as payment instruments in the EU. The Markets in Crypto-Assets Regulation (MiCA) establishes rules for crypto-asset service providers (CASPs), while PSD2 governs payment services and electronic money. 

Stablecoins that reference the value of a single currency are classified under MiCA as e-money tokens (EMTs). EMTs are deemed to be electronic money and therefore treated as funds under PSD2. This creates overlap: CASPs offering custody, exchange ot transfer of EMTs may be seen simultaneously as providing payment services under PSD2. This creates uncertainty over whether CASPs that already hold a MiCA licence would also need a PSD2 licence as a payment service provider (PSP) when facilitating EMT-related transactions. 

In its Opinion of 10 June 2025, the European Banking Authority (EBA) recognised that EMT-transactions function much like conventional payments and should meet equivalent standards of consumer protection and security.

Yet requiring CASPs to obtain a second licence under PSD2 would be disproportionate. For now, the EBA advises national authorities to avoid treating most EMT-related services as payment services. In the longer term, it calls for either MiCA to incorporate PSD-style safeguards or for PSD3/PSR to cover EMT services without double licensing.[6]

5. International contrast 

The way jurisdictions regulate stablecoins will shape which currencies dominate the next wave of digital payments. Comparing the U.S. and EU approaches is therefore crucial for understanding the euro's position in the future financial system. 

In the US, the GENIUS Act (2025) creates a federal framework for "payment stablecoins", requiring full 1-for1 backing with safe assets and granting foreign issuers access to the US market if they register and comply. This open model reflects a strategic goal: to reinforce the global role of the dollar and support private-sector innovation in payments. 

By contrast, the EU's MiCA subjects single currency stablecoins to strict reserve, redemption and prudential requirements. This cautious stance prioritises consumer protection, financial stability and the preservation of monetary sovereignty. 

The divergence matters. While US policy fosters rapid innovation and international uptake of dollar denominated stablecoins, Europe's cautious stance risks limiting market growth. If EU-based projects face heavier constraints than their US counterparts, the euro could lose ground as a digital settlement currency, leaving Europe dependent on dollar-stablecoins in global payments. 

6.     Conclusion 

Stablecoins clearly hold potential as a fast, low-cost and programmable means of payment. Their ability to settle almost instantly and integrate compliance tools gives them an edge over legacy payment infrastructures. At the same time, the concerns raised by the ECB and ESRB about financial stability, monetary sovereignty and consumer protection could justify a cautious regulatory approach. Moreover, regulatory uncertainty remains, particularly for single-currency stablecoins: under MiCA they are classified as e-money tokens, but the interplay with PSD2 still leaves open questions about dual licensing. By contrast, the U.S. GENIUS Act sets out a more permissive framework designed to entrench dollar leadership. 

Against this backdrop, the question is whether Europe should rethink its approach – finding a balance that safeguards stability without missing the wave of payment innovation.

[1] European Systemic Risk Board. (2025, October). Crypto-assets and decentralised finance: Report on stablecoins, crypto-investment products and multi-function groups. ESRB Crypto-asset Task Force.

[2] Coste, C.-E., & Pantelopoulos, G. (2025). Central bank money as a catalyst for fungibility: The case of stablecoins (ECB Working Paper Series No. 3111). European Central Bank.

[3] Higginson, M., & Spanz, G. (2025, July). The stable door opens: How tokenized cash enables next-gen payments. McKinsey & Company.

[4] Schaaf, J. (2025, July 28). From hype to hazard: What stablecoins mean for Europe. European Central Bank. 

[5] European Systemic Risk Board. (2025, October). Crypto-assets and decentralised finance: Report on stablecoins, crypto-investment products and multi-function groups. ESRB Crypto-asset Task Force.

[6] European Banking Authority. (2025, June 10). Opinion of the European Banking Authority on the interplay between Directive (EU) 2015/2366 (PSD2) and Regulation (EU) 2023/1114 (MiCA) in relation to crypto-asset service providers that transact electronic money tokens (EBA/Op/2025/08). European Banking Authority.