Euro Stablecoin Project: Qivalis Races to Counter Dollar Dominance

The euro stablecoin project is getting some traction. The Qivalis project now includes 37 banks from 15 different countries, with the addition of 25 additional member institutions.

It is unclear whether increasing the supply of euro-denominated stablecoins can successfully alter payment practices, especially given the current low demand for these coins.

However, the substantial increase in its value shows that institutions are becoming increasingly interested in a replacement for digital currencies tied to the dollar.

Reuters reported, citing sources, that the new members include banks from Germany, France, Spain, the Netherlands, and several Nordic nations.

However, the identities of the members will be announced formally later this month.

Twelve prominent French and German bankers were instrumental in launching the initiative in late 2024; it was then called Eurostablecoin but changed its name to Qivalis earlier this year.

Deliberately Political Project

Geopolitical and economic factors are at the heart of Qivalis's drive. The executives from the European banks that are part of the initiative have spoken out about their worries. They see the widespread use of dollar-pegged stablecoins, such as USDT and USDC, as a threat to national sovereignty and an economic danger to the world of global digital transactions.

More than 90% of the total stablecoin supply, which has now topped $240 billion, is comprised of USDT and USDC.

Among all stablecoins, those pegged to the euro make up less than 1%.

Given the current discrepancy, it is quite probable that a European corporation will use US dollars when conducting blockchain-based transactions, using decentralized finance protocols, or paying suppliers with digital assets.

US monetary policy and, more especially, sanctions enforcement, become exposed in this scenario. The prominence of the dollar in cryptocurrency transactions is no mere coincidence.

A senior official at one of the founding member banks of Qivalis, who wished to remain anonymous, told Reuters that it showcases a significant advantage that Europe has permitted to grow over time. Qivalis aims to address that issue, but it will require time.

This year, the geopolitical need for Qivalis has grown substantially. Many executive actions taken by the US government, including stricter secondary sanctions and an aggressive stance toward regulating digital assets, have prompted lawmakers in Europe to create their own autonomous payment systems.

The private sector has received backing from the European Central Bank, which is keeping its own plans for a digital euro, which won't be publicly launched for a few more years, separate and apart.

How Qivalis is Structured

With its emphasis on collaborative cooperation and shared governance, Qivalis stands in stark contrast to other stablecoin projects in Europe, which frequently depend on a single institution.

Each stablecoin is fully backed by one euro held in an account throughout the group, thanks to the reserves maintained by the member banks.

A Swiss organization is in charge of supervision, and a permissioned version of Ethereum with interoperability bridges to public networks is being used to build the technological infrastructure.

To prevent Qivalis from sitting idle on member banks' balance sheets, the stablecoin must be integrated into one or more commercial payment products. In addition, the banks have committed to a three-year volume target with financial penalties for continuous underperformance.

Some prospective members are uncomfortable with the structure, but proponents of the consortium argue it is necessary to prevent the initiative from becoming a meaningless news release and instead ensure it acquires actual momentum in the real world.

The fully implemented European Union's Markets in Crypto-Assets law (MiCA) formally issues license to e-money tokens, the regulatory categorization that includes stablecoins.

The euro stablecoin project is operating in compliance with this policy. Consistent identification procedures in fifteen areas and cooperation with different national regulatory agencies have been logistical nightmares for the group in its pursuit of regulatory compliance.

Demand Problem

The target market is still in its early stages, which presents a difficult structural reality for the Qivalis expansion.

Although there are currently a number of smaller euro-pegged tokens in circulation, the lack of users and use cases that may greatly increase demand has been the main reason why euro stablecoins have struggled to acquire popularity.

Trading cryptocurrencies and decentralized finance, which are mostly based on dollar pricing, were the primary incubators of the stablecoin market.

In monetary terms, assets are valued. The money in a liquidity pool is measured in dollars, and quotes are provided by lending protocols.

A major obstacle, similar to a chicken-and-egg issue, arises when adding a euro stablecoin to that infrastructure since it requires both sides of a transaction to choose euro-denomination.

Proponents of a euro stablecoin had hoped that cross-border corporate payments would undergo a faster digital revolution than they have.

Despite being more expensive and slower than bitcoin networks, traditional banking procedures and settlement systems are well-established and require nothing in the way of user training.

If you want to pay a German manufacturer using a Qivalis token instead of a SEPA bank transfer, you'll need to make sure they own and manage digital assets.

Without clearer regulatory guidance on accounting standards and asset custody, many company treasurers are reluctant to use this strategy.

Signs of Life in the Ecosystem

There is some good news in the forecast.

In anticipation of greater institutional availability, some European decentralized financial protocols have begun to include support for euro stablecoins.

With the introduction of MiCA, the market for tokenized real-world assets in Europe has skyrocketed, and with it, the need for on-chain euro liquidity. This is because a large number of tokenized European bonds and funds are issued in the single currency.

To reduce currency conversion costs, trade finance companies that use blockchain technology are very interested in settling in euros.

When compared to the conditions that existed when other euro stablecoin projects were launched, the market that Qivalis is entering looks to be radically different.

There has been an advancement in the sophistication of institutional custody arrangements. Regulatory structures are in place.

The big European banks are no longer on the sidelines; they're actively participating. The larger group will spend the next few years trying to figure out if this is enough to overcome years of dollar-based behaviours.

What Comes Next

Members' banks will participate in live interbank settlements using Qivalis tokens during a pilot transaction window that is expected to begin in the third quarter of 2026, coinciding with the formal announcement of the new members.

Assuming regulatory clearance is obtained in each of the fifteen member nations, a broader commercial launch that is accessible to corporate clients is anticipated during the first half of 2027.

Qivalis has announced that it is in the midst of associate membership negotiations with two non-European institutions, one in Singapore and the other in the United Arab Emirates. This group would allow access to the payment network but not complete consortium governance.

Through these partnerships, the stablecoin's impact would be magnified outside of the Eurozone, where the euro is already heavily used for trade finance transactions.

Not only does the project's potential for future successes reflect its significance, but it also represents a coordinated European effort to challenge the domination of the dollar in digital commerce.

Qivalis has established itself as a dominant player in the market by forming a large alliance with 37 banks. The next step is to figure out if it can create a stablecoin that actually satisfies consumer demand.