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By Peter Slagter in Alpha News —

Digital Euro: Not Yet a Viable Alternative to Stablecoins

ECB economist Philip Lane warns Europe risks monetary chaos without a digital euro. Yet his proposal—with strict limits and surveillance—lacks the innovation of borderless, programmable stablecoins. Can Europe's public coin remain competitive in a rapidly evolving market?

Digital Euro: Not Yet a Viable Alternative to Stablecoins

Philip R. Lane, Chief Economist of the European Central Bank, explained in the September issue of Finance & Development why Europe, in his view, needs a digital euro. He argues that without a digital version of central bank money, monetary stability is at risk, private payment monopolies loom, and Europe loses the symbolic value of the euro in the digital age.

Lane emphasizes that cash has long been the foundation of trust. The fact that everyone can exchange their bank deposits for central bank money has provided a guarantee of convertibility. If cash disappears, a digital euro must step into that role. This new form of money could immediately limit the power of private networks like Visa, Mastercard, and Apple Pay—a public alternative with a European character and a direct symbol of unity that the EU, according to Lane, is seeking.

So far, the reasoning is logical. However, when we take Lane’s points seriously, a more fundamental problem emerges. While the risks associated with private monopolies are real, the solution proposed by Brussels amounts to nothing more than a halfhearted public monopoly.

Why are stablecoins so successful? Not because they are imposed from above, but because they combine a set of features that make them irresistible: they are borderless, frictionless, tradable 24/7, and often very easy to use without bureaucratic hurdles. They are digital tokens that circulate just like cash—only programmable.

In contrast, the digital euro being outlined today appears much less appealing. What is currently under development is a coin with capital limits (a maximum amount one can hold, to prevent bank runs), built-in surveillance (fully transparent to the state), KYC thresholds that hinder access, and uncertainty about its form (with no freely circulating tokens). A group of European professors recently concluded that the online version of the digital euro “adds merely another layer on top of existing systems, without any clear benefit for users,” while the offline version is technically barely feasible and introduces new risks.

This is not a stable alternative; it is a coin that retains the disadvantages of centralization while lacking the benefits of innovation. In other words, while stablecoins are supported by billions of dollars in daily transactions, the digital euro remains a political symbol.

Lane often talks about innovation and efficiency, but that is precisely where the problem lies. Central banks are not innovation hubs; their strength lies in maintaining stability and in establishing and enforcing the rules of the game. True innovation comes from the market—from fintech companies and startups—where the incentives lead to building products that people actually use. It is telling that the most significant payment innovations of the past decade—from contactless payments to stablecoins and bitcoin—did not come from central banks.

The ECB is undoubtedly aware of these challenges, yet it still feels the political pressure to position itself as a geopolitical leader. The urgency comes from digitalization, which is making Europe increasingly dependent on American providers, while a truly pan-European payment method remains absent. In presentations the central bankers stress “strategic autonomy” and “pan-European innovation.” But anyone who reads the technical annexes sees experiments that mainly connect closed blockchain networks—indeed, they still exist—to established infrastructures such as TARGET2 or TIPS.

This approach is a far cry from the free, programmable tokens that stablecoins offer.

Moreover, there is an undercurrent of political tension in Lane’s argument. While the euro as a symbol of unity makes sense, in its intended form the digital euro is likely to be seen by citizens more as a tool of control than as a symbol of integration. A group of European professors has explicitly warned that the digital euro “could enable an unparalleled level of mass surveillance.” Ironically, this could undermine trust rather than bolster it.

The key question is not whether the digital euro can exist, but whether people want to use it. So far, the market is making its choice with its wallet. Stablecoins are growing rapidly, bitcoin is globally recognized as a digital alternative, and fintechs continue to roll out new applications. Whether Lane is right that public alternatives are needed to check private power remains debatable. However, the digital euro as currently designed in Brussels does not truly compete with private innovations. It is a paper shield through which sharp swords can easily penetrate.

A digital euro in itself is not a bad idea. In fact, there could be room for a public payment method that genuinely offers the same advantages as stablecoins: open standards, tokenization, low barriers, and interoperability. If Europe had the courage, a digital euro could be a valuable addition. But here lies the catch: Brussels rarely ventures into such radical innovation. The likely result is a coin that is overly controlled and too unattractive to play a significant role.

Lane’s argument thus serves less as a plea for the digital euro and more as an illustration of the gap between policymakers’ ambitions and market realities. Europe may claim it “needs” a digital euro, but the real question is whether Europeans will actually embrace it. As long as the digital euro lacks the very properties that make stablecoins successful, the outcome is clear: the market will decide for itself.

More Alpha

Are you a Plus member? Then we move on to the following topics:

  1. Baudet’s Motions: Gold to the Netherlands, Gold Savings Account, and Bitcoin Reserve
  2. Plasma and Stablecoins Steal the Show
  3. Wall Street Can No Longer Ignore Crypto

1️⃣ Baudet’s Motions: Gold to the Netherlands, Gold Savings Account, and Bitcoin Reserve

Contribution by Erik

During last Wednesday’s parliamentary debate on high inflation, FvD parliamentary group leader Thierry Baudet submitted three motions aimed at preserving the value of money, both for individuals and for the Dutch state. One proposal involved establishing a strategic bitcoin reserve. Another called for repatriating the Dutch gold reserves, and the third aimed to help develop a gold savings account at banks. While the bitcoin reserve is not likely to pass a vote, it is noteworthy that such proposals have even made it onto the agenda.

Forum voor Democratie is pro-crypto. In their policy positions they advocate for streamlined regulation for crypto companies, partly driven by concerns about citizens’ privacy. In the context of this inflation debate, Thierry Baudet supports his argument by invoking theories familiar to many bitcoiners.

He cites The Road to Serfdom by Friedrich von Hayek, the Austrian School economist who opposed central planning of the economy and monetary system. Baudet also highlights the consequences of abandoning the gold standard in 1971, a move he claims is unprecedented in history. Although his statement is somewhat overstated—since governments had allowed their currencies to drift from gold before 1971—it was President Nixon’s decision in 1971 that marked the definitive turning point, as even foreign central banks could no longer exchange US dollars for gold.

In 1971, the global monetary system detached from gold. The dollar, which had been the pivot of the system since the Bretton Woods Conference in 1944, lost its hard backing. Some countries allowed their currencies to float freely, while others pegged them to the dollar. What disappeared was the certainty provided by gold; the system henceforth relied solely on trust in fiat money. Since then, money has steadily depreciated, and savings have gradually lost their purchasing power.

The Three Motions

  • Gold to the Netherlands. The House is called upon “to repatriate this national gold reserve […] as quickly as possible and bring it back to the Netherlands.” 
  • Gold Savings Account. The government is requested “to enter into discussions with the banking sector and help develop a ‘gold savings account’ that allows account holders to easily convert their fiat money into gold.”
  • Strategic Bitcoin Reserve. The motion asks the cabinet “to start, alongside our national gold reserve, the establishment of a strategic bitcoin reserve.”

These and other inflation-related motions will be put to a vote in week 40—that is, at the end of September or the beginning of October.

About Gold to the Netherlands

The motion to repatriate gold is the least controversial and somewhat separate from the inflation debate. It is primarily a matter of risk management: should we store everything in ‘cold storage’ in our own vault, or outsource part of the management through a multisig solution?

In 2014, the Netherlands repatriated 122 tonnes of gold from New York. Since then, just under a third of the country’s gold has been stored domestically, with another third in New York and additional reserves in Ottawa (Canada) and London. There is merit in keeping some of our gold with international allies, since while domestic storage provides control, it also concentrates risk—a vulnerability in today’s fragile geopolitical climate. Still, having only 31% held domestically seems rather low.

About the Gold Savings Account

This is an intriguing idea, especially as the value of our money steadily erodes. We were taught that saving money in a bank account is wise, yet decades of monetary policy have undermined the true value of those savings.

At its core, Baudet’s proposal addresses the purchasing power of one’s savings—a topic that rarely gets the political spotlight, which tends to focus exclusively on wages. Few realize that while nominal savings may grow, inflation gradually erodes their real value. Protecting the purchasing power of one’s wealth is a challenge best left to investment experts.

As a society, if we expect people to save for the future—and we cannot assume everyone will engage in speculative investments—there is a strong case for an easily accessible savings account that is pegged to the value of gold.

About the Bitcoin Reserve

The proposal for a strategic bitcoin reserve caught the attention of international observers on X, including The Bitcoin Historian. Our Bart Mol responded to this, just to set the record straight:

In reality, the likelihood that DNB will establish a bitcoin reserve is currently negligible. The Dutch central bank follows the lead of the European Central Bank, which is not advocating for such a move. Even the relatively independent Czech central bank—after commissioning a study on using bitcoin as a reserve—remained skeptical. Nevertheless, it is noteworthy that political attention in the Netherlands is turning to monetary issues that go deeper than annual inflation figures.

2️⃣ Plasma and Stablecoins Steal the Show

Contribution by Peter

Stablecoins are receiving a great deal of attention this cycle. Their role in the crypto market is indisputable. From the IPOs of stablecoin companies to new initiatives both within and beyond the crypto sector—Tether is reinforcing its position and even taking steps toward the American market, Circle is building strong bridges to traditional finance, and banks, asset managers, and fintechs are all experimenting with their own versions. Anyone following the sector this year cannot ignore that stablecoins are becoming the foundation for an increasing number of applications.

In this context, Plasma emerged at the perfect moment. The project positions itself as the blockchain network for stablecoins, offering fee-free USDT transactions and over a hundred DeFi integrations right from day one. While many new networks focus on pushing technological boundaries, Plasma opted for a simple narrative: it is the network for money itself. And that message struck a chord.

The launch of Plasma and its accompanying XPL token turned out to be nothing short of a spectacle this week. Investors who participated in the ICO on Sonar could buy in at $0.05 per token and soon saw their investment multiply as the price soared to around $1.50. Even after a pullback to just under a dollar, this still translated to returns of 15 to 20 times their original investment. On top of that, a generous airdrop was issued—everyone who used Plasma before launch received $8,000 worth of free XPL. Social media was flooded with screenshots of returns that many can only dream of.

This created the perfect FOMO cocktail: staggering profits, unexpected bonuses, and a market hungry for a success story. Finfluencers seized the moment. Plasma’s decision to launch on Sonar—the invite-only platform of Cobie, one of crypto’s most respected voices—ensured maximum visibility in circles where FOMO drives investment decisions.

For these finfluencers, it was an opportunity not to be missed. They have been making numerous calls for years—sometimes ten, twenty, even a hundred per month—though most fade into obscurity. Every once in a while, however, one call stands out. With Plasma, their recommendation wasn’t just baseless hype. “Those who listened ended up with 10x or 20x returns,” they proclaimed from every corner. After a long period of modest gains, this breakthrough was celebrated widely.

The key question, of course, is whether Plasma is more than just a flash in the pan. In the short term, the hype is undoubtedly fueled by extraordinary profits. However, the foundation on which Plasma is built—the rise of stablecoins—is a long-term, structural trend. The use of stablecoins is continuing to grow, both within crypto and beyond, creating a growing need for infrastructure that enables faster, cheaper, and more reliable transactions. Plasma was the first to clearly articulate this narrative, giving the project an early advantage.

That said, it is unlikely that they will continue to command a premium indefinitely. New players will soon enter the market with similar themes or improved solutions. This does not diminish Plasma’s initial success, which has certainly set a high benchmark, but it does mean that investors should be cautious about extrapolating early gains. One thing is clear: the market for stablecoin infrastructure is far from saturated.

3️⃣ Wall Street Can No Longer Ignore Crypto

Contribution by Peter

"Our job is not to see the future, it’s to see the present very clearly."

With that statement, Matt Cohler, a partner at Benchmark Capital, once captured the art of investing. It is not about predicting the future, but about observing the present—paying close attention to what is happening right now.

Viewed through this lens, 2025 is the year when “going mainstream” is no longer a promise but a reality. When BlackRock launched its bitcoin funds in 2024, it signaled a turning point—a heavyweight, the world’s largest asset manager, adding bitcoin to its investment portfolio. Yet one can argue that one example does not make a trend.

The true mainstream arrives when the broader spectrum of Wall Street can no longer stand on the sidelines. Consider the conservative, ponderous giants who have traditionally been slow to act. This week, GSR Research summed it up perfectly: “TradFi is making its boldest push yet into digital assets,” listing names that speak for themselves—Vanguard, Morgan Stanley, JPMorgan, BlackRock, Citi, Schwab, and Visa.

These are no longer merely speculative remarks. Vanguard is exploring access to crypto ETFs for its brokerage clients. Morgan Stanley is on the verge of enabling crypto trading through E*Trade. Charles Schwab plans to introduce spot trading in bitcoin and ether, and Visa is experimenting with bitcoin rewards on credit cards at supermarkets.

What we are witnessing is a gradual integration of crypto into the core of the financial sector—not because the future appears dramatically bright, but because major players can no longer afford to ignore it. Rising customer demand, the momentum behind ETFs, and mounting competitive pressures compel them to act.

This reinforces Cohler’s point: you don’t have to predict the future of crypto, only to see the present clearly. And those who do will recognize that the mainstream era has truly begun.

🍟 Snacks

To wrap up, here are some brief highlights:

  • BNB Chain Hits a Record Number of Users. In September, over 56 million wallets were active—almost 10% more than the previous record. This surge coincides with renewed visibility for CZ at Binance and the launch of the perps platform Aster. Trading volume on decentralized exchanges on the network soared to $24 billion in one week, marking the strongest week of 2025. The question remains how much of this activity is sustainable and how much is driven by airdrop hunters.
  • Tether Seeks New Capital With a $500 Billion Valuation. According to Reuters, the largest stablecoin issuer plans to raise $15–20 billion in a private round. This move places Tether among the tech giants, underscoring both the profitability of USDT and its ambition to evolve into a global financial infrastructure. Whether investors will buy into this valuation remains to be seen.
  • Nine European Banks, Including ING and UniCredit, Join Forces for a Euro Stablecoin. The consortium aims to launch a MiCA-approved alternative in 2026 to the dollar-dominated market. The coin will be issued through a new entity in the Netherlands and is intended to be a trusted, regulated payment method. This initiative is Europe’s answer to the dominance of American stablecoin giants.
  • The AFM Warns About Crypto Platform MEXC. The company, which offers services in the Netherlands without a license, is no longer registered in a trade register, leaving its location unclear. According to the regulator, consumers face significant risks, including the potential loss of funds stored at MEXC.
  • Cloudflare Launches NET Dollar, a Stablecoin for the Internet. The concept is that AI agents and apps will soon be able to make both small and large payments independently. With traditional banks becoming less relevant and advertising revenue models under threat, Cloudflare aims to establish a new monetary layer beneath the web by working with standards organizations to integrate its idea into the fabric of the internet.

Thank you for reading!

To stay informed about the latest market developments and insights, you can follow our team members on X:

  • Bart Mol (@Bart_Mol)
  • Peter Slagter (@pesla)
  • Bert Slagter (@bslagter)
  • Mike Lelieveld (@mlelieveld)

We appreciate your continued support and look forward to bringing you more comprehensive analysis in our next edition.

Until then!

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