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 The Compliant Euro Stablecoin Market Is €660 Million. A Paper Published by the ESM Modelled a Trillion Dollars of It and Called the Result Manageable

Two documents published within a few weeks of each other describe the same market at two very different scales.

 is a measurement. FXC Intelligence, in a report dated 10 September, counts every euro stablecoin in circulation and finds that the ones compliant with the European Union's Markets in Crypto-Assets Regulation add up to about €660 million.



 is a stress test of the future. A working paper published by the European Stability Mechanism, written by Ulrich Bindseil, Romain Meuwissen, Giorgio Mondini and Martin Rohár, models what happens to the euro area financial system if stablecoins grow to between one and four trillion dollars by 2030, including scenarios with up to a trillion dollars' worth of euro stablecoins. Its conclusion is that even the bullish cases look manageable.



The paper carries a disclaimer that should travel with every quotation from it: it does not represent the views of the ESM or ESM policy. It is the authors' analysis. That is how it is treated below.


 The market as it actually is.

FXC's numbers, drawn from CoinMarketCap, put the total euro stablecoin market at $896 million, or about €770 million. Adding two recent launches brings it to $921 million. That wider total includes tokens that are not compliant with MiCA, Tether's EURt among them, whose redemptions closed in November 2025 after Tether chose to stop supporting it rather than adapt it to the regulation.

Strip those out and the compliant market is $767 million, about €660 million.

Inside it, one token dominates. 

 accounts for just under 60 percent. Société Générale-Forge's EUR CoinVertible holds 25 percent. Banking Circle's EURI has 5 percent, Monerium's EURe 4 percent, and Crédit Agricole's EURXT, launched in July 2026 through its subsidiary CACEIS, 3 percent. Revolut's newly launched retail token sits at 0.3 percent.

In absolute terms FXC counts more than €390 million of EURC in circulation, more than double the roughly €160 million of the second largest. EURC passed €400 million in August and stood at approximately €80 million at the end of 2024. That is close to a fivefold increase in under two years, from a base that is still small.

FXC describes EURC as used primarily by businesses for foreign exchange trading, borrowing and lending, and as compliant with MiCA. That last point is the one that decided the market structure. When the regulation arrived, 

Circle adapted its euro token to it and Tether withdrew its own.

Then the comparison that puts it in proportion.

FXC puts dollar stablecoins above $305 billion of combined market capitalisation. That is more than three hundred times the euro equivalent. EURC, the largest euro stablecoin, is roughly 0.15 percent of the entire stablecoin market.

And the whole stablecoin category is still small against the flow it is trying to serve. FXC's own work with Allium estimates that stablecoins carried about $135 billion of the $44.3 trillion moved across borders in 2025, roughly 0.31 percent.

So the honest description of the euro stablecoin market in October 2026 is: real, regulated, growing quickly, and still a rounding error next to the dollar. The interesting question is not where it is. It is what happens if it stops being small.



 What the ESM working paper modelled.

The authors built a flow-of-funds model across three regions, the United States, the euro area and the rest of the world, calibrated on 2025 sectoral accounts and projected to 2030. They tested dollar stablecoin scenarios of $0.9 trillion, $1.9 trillion and $4 trillion, taken from Citi's published range, against euro stablecoin scenarios of zero, half a trillion and a trillion dollars' worth.

They are candid that even the base case may be generous. In mid-2026 dollar stablecoins were fluctuating around $310 billion with no real trend growth since mid-October 2025, while compliant euro stablecoins remained below €1 billion.

The headline finding is that the aggregate effects on the euro area stay manageable even at the top of the range. The more precise finding is about where the effect lands.

Stablecoins do not make bank deposits disappear. They change their kind. A household that moves money from a current account into a stablecoin takes a granular, insured, cheap and stable retail deposit out of the bank. Part of that money comes back as a deposit from the stablecoin issuer, which is concentrated, expensive and liable to leave quickly. Under European liquidity rules, stable retail deposits carry assumed run-off rates of 3 to 5 percent. Non-operational deposits from financial entities carry 100 percent.

In the authors' most demanding scenarios, banks lose about 6 percent of household deposits, slightly more than $750 billion. If wholesale funding costs two percentage points more than retail, that is roughly $10 billion a year in additional interest. Meaningful. Absorbable over five years.

They add a point that tends to get lost. The same transformation happens when dollar stablecoins circulate in Europe. Limiting euro stablecoins through policy would not shield European banks from the effect. It would only decide whose stablecoins cause it.



 Where the authors push back on the current rules.

This is the part of the paper most likely to be quoted out of context, so it is worth being exact about what it says and whose view it is.

Under MiCA, issuers of e-money tokens must hold at least 30 percent of reserves as bank deposits, rising to 60 percent for significant issuers. The authors note that this requirement has been criticised as counterproductive for financial stability, citing other researchers, and their own policy section proposes replacing it with a principles-based approach that lets issuers spread reserves across a diversified pool of high-quality liquid assets. Their reasoning is concentration: a large deposit placed by a stablecoin issuer is exactly the kind of funding that can leave a bank in a single afternoon, which ties the stability of the stablecoin to the stability of a handful of banks and the other way round.

On remuneration, they write that the prohibition on paying interest to holders of e-money tokens lacks a compelling economic rationale and could be reconsidered, while prudential safeguards on liquidity, capital and governance should remain stringent. Their argument is that a fixed zero in a world of moving interest rates creates flows of its own whenever rates change.

They also raise a timing mismatch that has nothing to do with Europe specifically. Stablecoins can face redemption at any hour of any day, while bond and repo markets are not continuously liquid overnight and at weekends, which can concentrate asset sales at the moment markets reopen.



None of this is a recommendation from the ESM. It is four authors arguing a position inside a working paper, with the reasoning shown. That is precisely why it is useful.

 The two things the paper does not wave away.

The first is transition. The authors are explicit that their scenarios describe balance sheets in 2030 after markets have adjusted, and that a rapid reallocation from deposits into stablecoins could produce liquidity pressures and funding strains materially larger than the end state suggests. Manageable depends on pace.

The second is misuse. The paper recalls that stablecoins accounted for 84 percent of illicit transaction volume on public ledgers, as cited by the authors from Chainalysis's 2026 report, and it treats illicit payments and regulatory arbitrage as unresolved problems deserving more scrutiny. A serious case for euro stablecoins has to carry that sentence with it rather than leave it out.

And there is a scenario the authors describe as the worst outcome for Europe. Not a run, not a crisis. Stablecoins succeed broadly, dollar stablecoins circulate widely, and the compliant euro tokens stay marginal. In that world the effects on European bank funding arrive anyway, while the income from issuance accrues elsewhere.



 The banks are not waiting 👀

FXC's report lists what is coming. Qivalis, a consortium formed by nine European banks in 2025 including CaixaBank, ING and Raiffeisen Bank International, grew to 37 banks across 15 countries after BBVA joined in February and 25 more banks, among them ABN AMRO, Rabobank and Bank of Ireland, joined in May. It is targeting a wholesale euro stablecoin launch in the second half of 2026.

Separately, a group of 21 institutions including Bank of America, Citi, Banco Santander, BBVA and MUFG Bank announced in September an intention to form a company issuing stablecoins, starting with dollars and naming a MiCA-compliant euro token as a priority when it expands into other G7 currencies. It is targeting its first issuance in the first half of 2027.

Read next to the ESM paper, that is the clearest signal in either document. The institutions with the most to lose from deposit migration have concluded that the right response is to issue, not to wait.



 Where the rest of the stack fits.

Meridian Finance is one connected system on Arc, Circle's Layer 1, and the euro leg is part of it rather than an afterthought.

Meridian Pay accepts USDC and EURC at checkout, gasless for the payer, settling in under a second. A merchant selling across the euro area can be paid in EURC without converting through dollars on the way. YieldVault wraps Circle USYC so a waiting balance earns exposure to short-term Treasury yield instead of sitting idle, withdrawable at any time, with yield coming from the underlying Treasuries and no fixed or guaranteed rate offered or implied. PaymentStream pays by the second rather than by the month. A balance can sit in USDC, EURC, USYC or cirBTC and move between them without leaving the chain. Firmata Protocol carries identity, reputation and conditional settlement for agents under ERC-8004 and ERC-8183, settled over x402.

The timing point from part four applies directly. A payment made on a Sunday evening settles on a Sunday evening. The asset and the ledger are available at the same hours, which is the condition the ESM authors identify as missing when a stablecoin's reserves sit in markets that close.



The honest part 🙋‍♂️

All of it runs on Arc testnet, +20 contracts, each verified on Arcscan from the second of deploy, roughly one hundred thousand transactions and four thousand on-chain holders. Not mainnet.

Arc's public mainnet went live on 16 September with eleven founding validators. An independent security audit covering our contracts and the front end gates our migration to it, and that audit has not happened yet. We could have pushed the same bytecode the week Arc launched. We did not, because a payment stack asking merchants to trust a regulated euro token should not itself be the unreviewed part of the chain.



Three numbers, all of which FXC and the authors make measurable.



Whether the compliant share keeps rising. €660 million of a €770 million market is compliant today. If the non-compliant remainder keeps shrinking, MiCA will have shaped the market rather than shrunk it.

Whether EURC's share holds as the banks arrive. Just under 60 percent with no bank consortium yet live is one market structure. The same share after Qivalis launches would be a much stronger statement.

And whether the reserve rules move. The European Commission opened a targeted review of MiCA in May 2026, according to the ESM paper. The 60 percent deposit requirement and the remuneration prohibition are the two provisions the authors argue should be reconsidered. Whatever the review decides, those two lines will shape the euro stablecoin market more than any launch.



❓

No. The document is a working paper and states that it does not represent the views of the ESM or ESM policy. The authors argue for replacing the 60 percent bank deposit requirement with a principles-based approach and for reconsidering the remuneration prohibition. That is their analysis, published by the ESM, not an ESM position.



Why does EURC hold most of the compliant market 

❓

According to FXC Intelligence, Circle made EURC compliant with MiCA while Tether chose to stop supporting EURt instead of adapting it, eventually closing redemptions in November 2025. FXC puts EURC at just under 60 percent of the MiCA-compliant euro stablecoin market, with more than €390 million in circulation, more than double the second largest.



Would large euro stablecoins drain European banks 

❓

On the authors' model, no. They change the composition of bank funding rather than its total. In their most demanding scenarios banks lose about 6 percent of household deposits, slightly more than $750 billion, replaced partly by costlier wholesale funding, which they put at roughly $10 billion a year in extra interest. They describe this as manageable while warning that a fast transition would be harder than the end state.



Does Meridian perform anti-money-laundering or know-your-customer checks 

❓

No. Where a merchant, institution or broker is the counterparty, it keeps its own customer due diligence and regulatory obligations. The stack provides settlement, conditional release and proofs.



❓

No. The stack runs on Arc testnet, with every contract verified on Arcscan. Migration is gated by an independent security audit covering the contracts and the front end. Testnet live, audit before mainnet, soon ⏳



, FXC Intelligence, Tom Bleach, 10 September 2026, market capitalisation data from CoinMarketCap.


: a European perspective, ESM Working Paper Series No. 79, Ulrich Bindseil, 

, Giorgio Mondini and Martin Rohár, October 2026. The paper does not represent the views of the ESM.


, Chainalysis, as cited in ESM Working Paper No. 79.

Built on Arc, Powered by Circle



Not investment advice. Nothing here endorses any provider or forecasts the decisions of any regulator.

🔍 The Compliant Euro Stablecoin Market Is €660 Million. A Paper Published by the ESM Modelled a Trillion Dollars of It and Called the Result Manageable

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