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By Peter Slagter in Alpha News —

ECB Finally Takes Stablecoins Seriously

ECB advisor Jürgen Schaaf warns that dollar-backed stablecoins are upending global finance. As Europe remains on the sidelines, could crypto-dollarisation erode its monetary sovereignty? Is this the tipping point in the digital money revolution?

ECB Finally Takes Stablecoins Seriously

It is rare to see an institution like the European Central Bank come this close to acknowledging its shortcomings. A careful reading of the latest op‐ed by ECB advisor Jürgen Schaaf reveals exactly that. Rather than issuing the usual warnings about speculative tokens, crime, and energy consumption, Schaaf now expresses concern over something entirely different: the strategic ascendancy of stablecoins—particularly the growing dominance of the U.S. dollar.

Schaaf argues that stablecoins are reshaping the global financial system—not at the periphery, not as a mere gimmick or a short‐lived trend, but right at its core. Hundreds of billions in crypto dollars are already circulating on public networks, and that money is in the hands of hundreds of millions who use it not only for crypto trading but also for payments, savings, fund transfers, and transactions executed far more efficiently than in the traditional financial system.

But what is Europe's position in this unfolding scenario? It appears to be largely on the sidelines.

Schaaf contends that the euro hardly holds any significant role. The stablecoin market is dominated almost entirely by tokens pegged to the dollar, with only a few initiatives attempting to incorporate euros—and often only marginally. While European banks occasionally show interest, there is no genuine alternative force. This, Schaaf warns, poses a problem not only for the ECB but also for Europe’s strategic standing on the global stage.

Schaaf warns that the ramifications of this trend could be profound. As European citizens and companies increasingly turn to digital dollars, the ECB risks losing its grip on monetary policy. Interest rate decisions, lending practices, and the money supply may come under the sway of a currency over which Europe has no control. This is no mere theoretical risk; Schaaf highlights the danger of “crypto-dollarisation,” where the infrastructure underpinning digital money transactions becomes progressively less European.

The Americans are well aware of this challenge. They have implemented rules that reinforce stablecoins, aiming to safeguard the dollar’s dominance in the digital era. Rather than focusing solely on risk mitigation or granting the central bank exclusive control over digital dollars, they are letting the market take the lead—fostering growth while simultaneously boosting demand for American government bonds.

In contrast, Europe appears to stand by and simply watch.

What’s particularly striking about Schaaf’s policy proposals is their lack of conviction. The tone is cautious, reserved, institutional, and academic. Under his framework, euro-stablecoins are acceptable—as long as they are fully regulated, adhere to strict risk management, and meet the highest standards. In practice, this approach tends to yield offerings that are cumbersome, expensive, uninnovative, and uncompetitive. It’s no coincidence that MiCA, the European crypto regulation, has been designed in a way that makes issuing euro-stablecoins unattractive.

Then there is the digital euro. Schaaf envisions it as a robust safeguard for Europe’s monetary sovereignty. However, we all know the familiar script: a project that’s been in development for years, set to take even longer to materialize, and when it finally arrives, it will be riddled with limitations—no interest, no anonymity, a cap of just a few thousand euros, and minimal usability outside the EU. Essentially, it would amount to nothing more than a digital voucher with a national passport. Meanwhile, stablecoins are already being integrated by Visa and Mastercard, with Amazon and Walmart experimenting with them in their payment systems.

No matter how impressive your defenses, if the enemy has already crossed the river, they’re rendered moot.

What makes Schaaf’s analysis so compelling is its inherent paradox. On one hand, he illustrates how powerful stablecoins have become—their speed, accessibility, global reach, and efficiency all make them an attractive alternative to traditional bank money, especially when they offer yields or are employed in decentralized financial markets.

Yet on the other hand, he clings to the old view of bitcoin and ether as worthless—devoid of intrinsic value, backing, or a future. This is striking, because stablecoins don’t exist in isolation. Their strength comes from the very networks they operate on: public, permissionless blockchains powered by their native currencies. Without ether, there is no Ethereum; without decentralized infrastructure, stablecoins are impossible. Ironically, the qualities Schaaf praises in stablecoins arise precisely from the innovations he dismisses.

It’s like adoring email while dismissing TCP/IP as absurd.

This is the true blind spot—not only in Schaaf’s thinking but in the ECB’s overall approach. Recognizing that stablecoins represent a significant development is a welcome step—Schaaf even admits it’s long overdue. Yet his refusal to take the underlying technology seriously is astonishing. It’s as if one admires a magnificent bridge while ignoring the essential role played by its pillars and abutments.

Schaaf warns that this strategic oversight could ultimately cost Europe dearly—and he may be right. Still, one cannot help but see him as embodying that very blind spot. His blog reads like a diagnosis of an emerging crisis for which Europe is woefully unprepared.

It is, in a sense, a half-hearted admission of guilt.

More Alpha

Are you a Plus member? Then we continue with the following topics:

  1. New at Saylor’s Candy Store: Stretch
  2. In-kind redemptions for crypto ETFs
  3. SEC: from foe to architect

1️⃣ New at Saylor’s Candy Store: Stretch

Contribution from Erik

Michael Saylor, the man whose appetite for bitcoin remains insatiable, appears frequently in these discussions. On July 29, a new financial product went live on Nasdaq. With the launch of Stretch (STRC), his company raised $2.5 billion—funds that were immediately deployed to acquire, yes, you read that correctly, 21,021 bitcoins.

But what exactly is Stretch? The term refers to a type of preferred share—the fourth financing method Michael Saylor employs to acquire bitcoin. Previously, he raised capital through cash, convertible bonds, and common stock issuances. With Stretch, Strategy can raise funds without immediately diluting existing shares.

The Expanding Candy Store

Within the realm of preferred shares, Stretch represents yet another variant—the fourth in his arsenal. It is fast evolving into a veritable candy store of financial products. Why so many options? Saylor aims to cater to a diverse range of investors, each weighing risk and return differently. Every new financial instrument Strategy offers fills a unique niche on that spectrum.

What Is Stretch?

Stretch shares are priced at roughly $100 and provide a variable monthly dividend. If the price falls below $100, the dividend is increased to boost demand. Conversely, if the price rises above $101, Strategy will issue new shares to bring it back down. This mechanism helps maintain the price around the $100 mark.

The initial interest rate was an attractive 9% per annum, though it is expected to taper off over time. The STRC shares are significantly over-collateralized by bitcoin on Strategy’s balance sheet—the extent of coverage depends on bitcoin’s market value and the total outstanding value of STRC. Generally, Strategy holds roughly seven times more bitcoin in reserve than the value of most of its financial products.

The structure of Stretch is somewhat reminiscent of algorithmic stablecoins like DAI, which are backed by ETH. However, a key difference is that those stablecoins do not offer any yield. Stretch targets investors seeking a cash-like instrument with monthly returns, similar to a money market fund—an investment vehicle that puts money into short-term, secure financial instruments. Such funds often serve as an alternative to savings accounts or as a temporary repository for cash for both retail and institutional investors.

Stretch further solidifies Saylor’s reputation as a shrewd financial engineer. Rather than simply selling bitcoin, he is offering innovative financial tools tailored to a broad range of investors. Whether these instruments will prove effective when the next bear market hits remains to be seen, as they face the test of falling prices for the first time.

Ultimately, Saylor’s goal appears to be to position his firm as a de facto central bank for bitcoin within the institutional sector.

2️⃣ In-Kind Redemptions for Crypto ETFs

Contribution from Erik

American crypto funds have been given regulatory approval for in-kind creations and redemptions. This means that authorized participants can now directly deposit or withdraw bitcoin when creating or redeeming ETF shares. This decision is viewed as another significant milestone in the ongoing institutionalization of the crypto market.

What Are In-Kind Creations and Redemptions?

In an in-kind transaction, authorized participants—intermediaries in ETF trading—don’t deliver cash to the fund manager. Instead, they provide the actual asset in which the fund invests; for a bitcoin fund, that asset is BTC, and for an ether fund, it’s ETH. Previously, settlement was done in dollars, often involving a more expensive and complex process.

Why Is This Important?

Unlike a stock ETF—where shares only have meaning within the confines of a stock exchange—BTC and ETH are independent currencies, making direct deposit and withdrawal the logical choice. Primarily, this move symbolically acknowledges crypto as a mature financial asset. Additionally, there are two key benefits:

  • Higher efficiency and improved price discovery: By working directly with crypto, ETFs eliminate costly intermediary steps such as buying or selling BTC on external trading platforms. This results in tighter spreads and a price more closely aligned with the underlying market.
  • Tax benefits for institutional players: In-kind redemptions allow large investors working with authorized participants to deposit and withdraw their crypto assets without triggering immediate tax consequences.

These changes should make crypto funds more appealing to asset managers and pension funds, marking a breakthrough at the institutional level. The U.S. is now poised to offer more efficient, tax-advantaged, and better-functioning exchange products for cryptocurrencies.

3️⃣ SEC: From Foe to Architect

Contribution from Peter

This is one of those stories that was bound to happen eventually. Although the timing was uncertain, the change was inevitable—a shift best appreciated with a glass of Italian wine against a mountain backdrop.

For a decade, the SEC served as the bogeyman for crypto companies. Under Gary Gensler’s leadership, lawsuits were directed at nearly everything in the crypto space. Exchanges were prosecuted, tokens were broadly classified as securities, and American innovation quietly migrated overseas.

But the winds have shifted. At a press event on July 31, the SEC under Chairman Paul Atkins made a dramatic about-face with the launch of “Project Crypto” — a clear move from deterrence to an invitation for innovation.

The ambitions behind the program are lofty. America aims to become the crypto capital of the world. You might even hear echoes of Trump’s pre- and post-election promises. Innovation is no longer being stifled; it now finds a home within a modern, practical regulatory framework. Although this may seem obvious now, given that the SEC once relegated crypto to the realm of lawless antics, the shift is nothing short of revolutionary.

What does the agenda entail? The SEC is developing clear guidelines for a wide range of tokens—from securities and stablecoins to digital goods and collectibles. The new framework includes safe havens for emerging projects, exceptions for airdrops, and rules tailored to the practical workings of blockchain networks. Notably, it also introduces the concept of super-apps, allowing a single entity to combine trading, custody, staking, and lending—provided it operates under proper supervision.

The contrast with the previous regime is stark. While Gensler relied on vague threats and reactive enforcement, Atkins favors predictability and collaboration. It’s a complete turnaround, and it feels genuine. Atkins speaks of a “digital financial revolution,” one in which blockchain networks become as integral to our lives as our smartphones.

However, caution remains. These plans have yet to become law—consultations still need to begin, and the U.S. Congress is rarely known for swift action. Nonetheless, the tone has been set. The once-hostile SEC is now on a new path. While the emerging environment is not a warm embrace, it certainly signals that crypto is now taken seriously.

Thus, Project Crypto represents more than just a policy shift. It acknowledges that crypto is here to stay, that innovation deserves room to grow, and that sometimes a complete turnaround is necessary after years of misdirection.

🍟 Snacks

To wrap up, here are some quick bites:

  • Crypto quarterly results reveal winners and losers. Robinhood exceeded expectations with revenue up 45%. Tether reported $4.9 billion in profits and now holds $127 billion in U.S. government bonds. Coinbase, however, fell 6% short of revenue expectations. Meanwhile, MicroStrategy (MSTR) reported substantial unrealized gains but is refraining from selling shares as long as the share price remains below 2.5 times book value—which, for now, it does. The crypto sector continues to grow, yet tensions between profit, valuation, and trust remain evident.
  • JPMorgan and Coinbase form a strategic partnership. This fall, Chase customers will be able to use their credit cards to purchase crypto on Coinbase. In 2026, direct bank connections and the option to convert reward points (Ultimate Rewards) into crypto assets are planned. Notably, CEO Jamie Dimon—once a staunch crypto critic—now appears open to stablecoins, tokenized deposits, and collaboration with Coinbase’s Base network.
  • Ethereum celebrated its tenth anniversary this week. On July 30, it marked a decade since the first block was mined. During a livestream, Vitalik Buterin and Joseph Lubin shared reflections as a symbolic NFT torch was passed on by the community. What began as an ICO experiment has evolved into the backbone of DeFi, now representing over $100 billion in invested assets.
  • Kraken plans to go public in 2026 with a valuation of $15 billion. The crypto exchange is preparing a $500 million funding round and is targeting an IPO in the first quarter of next year. After years of legal challenges, the path forward now appears clear—though Kraken CEO Arjun Sethi remains cautious, stating, “We will only go public if it truly benefits our customers, partners, and shareholders.”
  • Senator Lummis wants crypto to be considered in mortgage applications. Her proposed bill would require Fannie Mae and Freddie Mac to factor digital assets like bitcoin and ether into credit assessments, potentially allowing young savers to keep their crypto holdings. Critics warn of volatility and systemic risks, but this could mark the first step toward recognizing crypto as official collateral for a home.
  • Windtree Therapeutics plans to invest $700 million in BNB. The biotech firm has received approval to allocate nearly all its capital to acquiring Binance Coin and is partnering with Kraken to manage the purchase and storage. Following the announcement, BNB’s price surged by 7%. This opportunistic move sees a publicly traded company choosing an altcoin as its reserve asset.
  • The White House has published a new crypto report. President Trump’s task force outlines plans for clear regulatory guidelines, emphasizing the dominance of dollar-pegged stablecoins and the on-chain integration of traditional financial markets. While CBDCs are dismissed and the right to self-custody championed, notably, there is no mention of the promised Strategic Bitcoin Reserve.
  • PayPal launches ‘Pay with Crypto’ for 650 million users. Soon, sellers will be able to accept over 100 cryptocurrencies via wallets such as Coinbase and MetaMask. Transactions will be immediately converted into dollars or PYUSD, with fees up to 90% lower than those of international credit cards. Additionally, PayPal’s stablecoin offers a 4% yield for sellers. This is a significant step toward global crypto payments, with PayPal acting as a bridge between traditional and digital finance.

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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