New Euro Denominated Stablecoin Launch: Insights from ING
Following the announcement that nine European banks are collaborating to launch a Euro-denominated stablecoin, Finextra engaged with Floris Lugt, digital assets lead at ING, to discuss the motivations behind this initiative and the decision to move ahead without waiting for the European Central Bank’s digital euro initiative expected in 2029.
Building a Unified Digital Euro Standard
The ING-led consortium consists of CaixaBank, Banca Sella, KBC, Danske Bank, DekaBank, UniCredit, SEB, and Raiffeisen Bank International. Lugt emphasizes the necessity for “one European standard,” arguing that forming a consortium of banks is the most effective way to achieve this. “It’s an open consortium,” he notes, inviting more banks to participate.
While specific names of additional banks and fintechs joining the consortium remain undisclosed, Lugt underscores the need for a unified, regulated digital Euro standard to fully leverage blockchain’s advantages for clients. The project aims to create a trusted, interoperable payment instrument with shared governance among the participating banks.
Tokenized Royalties: A New Frontier for Stablecoins
Beyond traditional finance, Lugt points out that tokenizing intellectual property rights, such as music royalties, can streamline payments, enhance transparency, and establish new liquid markets. This illustrates the expansive potential of stablecoins and blockchain technology.
He elaborates: “Streaming platforms are tasked with paying musicians for their intellectual property. While it seems straightforward—keeping a database of streamed songs and issuing correct payments—this process can become complex due to the involvement of multiple parties.”
Currently, it can take musicians between six to nine months to receive payments, often with inaccuracies. Lugt proposes that tokenizing these rights would permit quicker, cheaper, and more automated transparent payments. Moreover, tokenization results in a tradable asset, fostering a new liquid market.
Although Lugt clarifies that this is merely one among many emerging opportunities, it provides insight into the future developments the consortium aims to pursue.
MiCAR: Enabling Strategic Innovation
Strategic innovations like this are facilitated by MiCAR (Markets in Crypto-Assets Regulation), which creates a unified regulatory landscape for crypto-assets and services across the EU. By setting forth transparency and disclosure requirements, MiCAR protects investors while preventing market abuse. It encourages innovation in what has historically been an unregulated space, ensuring financial stability and security across the crypto-asset market.
In conjunction with MiCAR, ING acknowledges that "stablecoins can serve as trusted payment instruments, ideally issued by individual banks. However, this could lead to market fragmentation, making it essential to create interoperable stablecoins to realize the full benefits of blockchain technology."
Complementing the ECB’s Digital Euro
The consortium’s stablecoin will incorporate blockchain programmability and new applications. In contrast, the European Central Bank is developing a non-blockchain, traditional payment-focused digital euro. Lugt notes that these two initiatives are complementary, pointing out that “the philosophy behind the digital euro diverges from ours. We prioritize the technological benefits for our clients, while the digital euro is focused on day-to-day payments, where existing solutions are already available.”
Unlocking Diverse Blockchain Applications
With blockchain technology at its core, the consortium’s stablecoin aims to facilitate instant, peer-to-peer payments across various applications—ranging from supply chain automation and e-commerce split payments to cross-border transactions and tokenized financial assets. Lugt describes this stablecoin as a universal means of payment designed to cater to evolving client demands in both B2C and B2B contexts.
The next significant milestone is the planned launch in the second half of the upcoming year. Key steps include hiring management and staff, developing a technical and operational framework, and securing an e-money license. However, reaching consensus on common infrastructure and advancing the ecosystem to new technologies remains a considerable challenge.