color: var(color-red-500) – Minority Mindset

<a href="https://jpykr.com/eur-usd/">Euro</a> Stablecoin Clash: Banks Build Qivalis While the ECB Pushes Back

A company treasurer in Europe needs to be able to pay suppliers immediately using euros on a blockchain. Their bank suggests a new digital euro system, similar to Qivalis, that would be limited to approved users. However, the company’s developers favor a more common, open digital euro already used in decentralized finance. At the same time, the European Central Bank is calling for tighter regulations around these kinds of digital currencies.

Europe’s crypto landscape is now divided: traditional banks are developing their own digital euro tokens, while regulators aim to maintain control by prioritizing central bank-issued money. For those managing finances, legal issues, or crypto plans in Europe, the coming year will be critical in determining which approach prevails.

Let’s break down what’s going on with these “Qivalis” bank tokens: how they might actually function, and what the European Central Bank will and won’t allow.

The Big Picture

The rules for stablecoins in Europe are changing thanks to MiCA, a new set of regulations for crypto. Starting in mid-2024, companies issuing stablecoins linked to the euro will need to follow the same rules as traditional money issuers, ensure their coins can always be exchanged for their face value, and be transparent about how they operate. Meanwhile, banks are experimenting with digital versions of traditional money that function like stablecoins but operate within the existing banking system.

This competition isn’t just about cryptocurrencies versus traditional banks. It’s a fundamental question of how digital transactions will work: which type of digital euro – issued by the central bank, commercial banks, or private e-money providers – will be used to complete purchases, and what systems will facilitate those transactions.

The European Central Bank envisions a future where tokenized assets are settled using central bank money, specifically through a digital euro for everyday consumers and specialized systems for businesses. While private tokens will be allowed, the ECB emphasizes they must not threaten a country’s monetary control, safeguard consumer rights, or disrupt the reliability of payment systems.

Europe’s Rulebook Is Catching Up With On-Chain Euros

The MiCA regulation categorizes stablecoins that reference traditional currencies into two types: e-money tokens (EMTs), which are linked to a single currency, and asset-referenced tokens (ARTs), which are backed by a variety of assets. Euro-based stablecoins are considered EMTs and can only be issued by officially authorized financial institutions – either e-money institutions or credit institutions. Oversight of these issuers is shared between national authorities and the European Banking Authority (EBA), particularly for larger issuers.

Two points matter for market structure:

MiCA imposes strict redeemability, reserve, and disclosure duties on EMT issuers, pushing the market toward regulated players.
There are usage constraints for tokens used as a “means of exchange,” especially for non-euro stablecoins, signaling the EU’s preference for euro settlement in the Single Market.

The European Central Bank is moving forward with its digital euro plans and is testing how to settle financial transactions using digital tokens. These tests explore linking tokens to central bank money, either through automated triggers or dedicated systems. The key takeaway is that privately issued tokens are meant to work *with*, not *replace*, the existing core financial infrastructure.

Key reference points:

MiCA stablecoin provisions took effect in mid-2024; the European Commission outlines the framework and scope (official overview).
The EBA issued technical standards and guidance for EMT/ART governance and supervision throughout 2024–2025 (EBA crypto-assets hub).
The ECB continues exploratory work on a digital euro and wholesale settlement interfaces for DLT (ECB digital euro).

Who’s Building Euro Tokens Right Now?

Crypto-native EMTs: public-chain reach, regulated perimeter

Bank-led tokens: tokenized deposits and permissioned rails

European banks are testing digital versions of commercial bank money, often using secure, controlled ledger systems. Société Générale’s EUR CoinVertible (EURCV) is designed for businesses and includes built-in compliance features and access controls. There’s also work being done by groups of banks to create a token – similar to “Qivalis” – that essentially represents a euro deposit and can be easily transferred, all within a regulated environment for business use. While the specific branding and technology might change, the core idea is clear: banks aim to create a digital euro that operates within the existing banking system.

Wholesale settlement options: keep the core in central bank money

As part of my research, we’re looking at how Distributed Ledger Technology (DLT) platforms can connect to central bank money for settlements. We’re exploring two main approaches: using existing systems like T2/TIPS to move funds, or building new components directly onto the ledger to manage central bank liquidity. This connection is really important because it will determine whether digital euros issued by private entities actually *are* the final settlement asset, or if they’re just a faster way to access central bank money.

Here’s a breakdown of different types of digital euro models:

Crypto-Native Euro EMTs (like EURC, EUROe, EURe): These are issued by digital money institutions and backed by cash reserves. They operate on public blockchains like Ethereum and are available to both individuals and businesses, with standard identity checks. They are regulated by both the upcoming MiCA framework and existing e-money laws, overseen by national authorities and the EBA.

Bank Tokenized Deposits (like Qivalis): These are created by traditional banks as digital representations of deposits. They’re backed by the bank’s overall balance sheet and covered by deposit guarantee schemes. They typically operate on private or permissioned networks. Access is usually limited to corporate clients or approved parties and are primarily governed by banking regulations, though broader retail access could trigger MiCA/e-money rules.

Wholesale CBDC/Trigger Settlement: This is a digital form of central bank money issued directly by the central bank. It doesn’t require traditional backing as it *is* the liability of the Eurosystem. It functions on systems linked to real-time gross settlement (RTGS) or dedicated wholesale digital networks, and is used by financial institutions and market participants, overseen by Eurosystem policies.

Under the Hood: How a “Qivalis”-Style Bank Token Could Actually Work

Although details vary, most euro tokens created by banks aim to offer programmable features while still following all relevant banking regulations. Here’s a likely way it works:

A corporate opens a dedicated account with a participating bank. Deposits earmarked for tokenization are segregated per product terms.
The bank mints a euro-denominated token 1:1 against the deposit and credits it to the corporate’s wallet on a permissioned ledger.
Transfers occur between whitelisted counterparties—suppliers, marketplaces, or internal treasury wallets—subject to on-chain compliance checks.
For off-ramp, tokens are burned and sight deposits are credited back instantly; settlement finality is logged on-chain and in core banking systems.
For interbank flows, tokens may interoperate via bilateral links or a shared scheme; large-value settlement can be synchronized with RTGS via a trigger to keep net exposures tight.

Ledger design and access

Banks or groups of banks will likely manage these systems with restricted access. User identities will be verified upfront, linking each digital wallet to a known and legally recognized entity. This approach minimizes money laundering risks, but it also limits the ability to freely combine and build upon the system with other applications. Some proposals involve connecting to public blockchains through carefully controlled channels, but regulators often examine these connections closely.

Compliance baked into the token

It’s common for digital asset transfers to have restrictions, like blocking certain addresses, checking for sanctions compliance, and limiting amounts based on risk levels. More advanced systems allow for automated processes such as paying invoices, holding funds in escrow, and releasing payments only when specific conditions are met – features that businesses find valuable, but most everyday stablecoins don’t offer automatically.

Interoperability puzzles

The main challenge is that different banks operate in isolation. While a token issued by one bank benefits its own customers, it doesn’t create a unified system for payments. A shared set of standards, open to all banks, could allow their tokens to work seamlessly together. Otherwise, businesses are stuck managing multiple separate systems, each controlled by a different bank.

Bridging to central bank money

Financial regulators are aiming to link settlement of large transactions to central bank funds. This suggests systems where digital token transfers work alongside existing platforms like T2/TIPS, or future wholesale payment systems, to minimize risk during the day and ensure money continues to flow smoothly through the economy.

Why the ECB Is Wary—and What the Pushback Targets

The European Central Bank (ECB) has repeatedly stated that stablecoins are acceptable, as long as they don’t replace traditional central bank money for common purchases. The ECB has three main concerns about stablecoins:

Monetary sovereignty and unit of account: If private euros dominate retail payments, monetary policy transmission could be blurred, especially if tokens migrate across borders and lightly supervised venues. See the ECB’s digital euro materials for policy framing (ECB digital euro).
Run and redemption dynamics: Stress can trigger sudden redemptions into central bank money. Without robust reserve and liquidity management, even euro-referencing tokens can transmit shocks to payment rails.
Fragmentation risk: Multiple non-interoperable bank tokens could recreate the pre-SEPA patchwork—bad for competition and cross-border commerce.

This resistance stems from the European Central Bank’s (ECB) view that privately created digital tokens used for everyday transactions need strong regulation (like the MiCA and e-money laws) and careful monitoring. More significant tokens will face even greater scrutiny from the European Banking Authority. If banks introduce transferable tokens that function like electronic money, regulators will likely insist they follow the same rules as traditional e-money.

This doesn’t mean banks can’t issue their own digital tokens. It simply means these tokens need to work *with* the existing European financial system, supporting central bank systems rather than trying to replace them.

What This Means for Exchanges, Fintechs, and DeFi Builders

Over the next year, people involved in the market will encounter important choices. Here are some key things to think about:

Liquidity versus compliance trade-offs

Digital asset-focused market makers operating on public blockchains now provide wider access to funds and connect with more exchanges. Tokens that follow European regulations, like EURC, should benefit from easier cross-border use and consistent reporting. However, getting these tokens into everyday decentralized finance platforms could still be tricky due to rules around promotion and ensuring they’re right for individual investors.

Treasury and payments workflows

Treasurers at companies often like using bank-issued digital tokens because they connect easily with their current credit agreements, accounting systems, and overall financial software. Features like automatic escrow services, early payment options with discounts, and immediate payments are especially attractive if the process is streamlined and synchronized with real-time gross settlement systems, reducing financial risks.

Interoperability bets

Construction companies designing financial systems should prepare for a future with multiple types of blockchains. They’ll need public blockchains for open financial services and private, permissioned blockchains for business transactions and traditional capital markets. To prevent funds from getting stuck, it’s crucial to build systems that can easily communicate with each other using standardized messaging, reliable data sources, and secure connections.

Custody and auditability

In the future, secure digital wallets for organizations, automated policy enforcement, and transparent transaction records on the blockchain will become increasingly important. Auditors will likely ask for detailed checks to ensure the number of tokens matches the amount held in reserves and documented settlements, particularly when transactions involve both public and private blockchains.

Risks & What Could Go Wrong

Regulatory reclassification: A bank token pitched as “deposit-only” could be deemed an EMT if it becomes widely transferable, triggering MiCA obligations and potential service interruptions during relicensing.
Interoperability stalemate: Competing bank schemes may not interconnect, fragmenting euro liquidity and forcing corporates to maintain multiple banking relationships and wallets.
Liquidity concentration: If one or two tokens win outsized share, policy-makers may label them “significant,” imposing caps, higher capital, or redemption stress tests.
Bridge and oracle risk: Any path between permissioned systems and public chains introduces new attack surfaces and legal liabilities.
Operational outages: Permissioned ledgers operated by consortia face complex governance. Software bugs or key management failures could halt payments for entire sectors.
Misaligned incentives: Banks may prefer closed ecosystems that limit competition, while innovators seek openness—leading to standards wars that stall adoption.
Market misuse: If tokens leak into high-risk venues without robust compliance, expect swift supervisory action that could freeze assets or curtail functionality.

Stablecoins aren’t a simple, hands-off form of money. They’re actually regulated financial products, and how risky they are depends on things like the laws governing them, what they’re backed by, how they’re managed, and where transactions ultimately happen.

Crypto Daily provides the latest news and expert analysis on MiCA, stablecoins, and the digital euro. They cover what regulators, banks, and cryptocurrency companies are doing in these areas. Stay informed with updates at Crypto Daily.

Frequently Asked Questions

What is “Qivalis” in the context of euro stablecoins?

Industry experts are talking about a new type of digital money banks are creating. It’s like a tokenized deposit, meaning it’s programmable money issued in euros on secure, private networks. While the exact details – like the name, who can use it, and when it will be available – haven’t been announced yet, it’s best understood as a new *type* of financial tool, not a finished product that’s been released.

How is a bank token different from EURC or other crypto-native euros?

Bank tokens are essentially digital representations of deposits held with a specific bank and operate on private, controlled networks with limited access. Meanwhile, euro-backed tokens (like EURC) are a type of digital money regulated under new European laws (MiCA). These tokens are generally built on public blockchains and can be exchanged for euros held securely by the issuer. Both types of tokens strive to maintain a stable value equal to one euro, but they are governed by different regulations and operate on different systems.

Will the ECB ban euro stablecoins?

A complete ban on crypto is unlikely. The EU is focusing on regulation through its MiCA framework, rather than prohibition. However, cryptocurrencies widely used for payments will be heavily monitored, and those that don’t meet the rules could be restricted or removed from EU markets. Larger issuers may also face increased scrutiny and limits on how their tokens are used.

Can DeFi protocols integrate bank tokens?

From my analysis, while it’s technically possible to use bank tokens within DeFi, it’s not straightforward. Most bank-issued tokens aren’t designed for open DeFi platforms; they’re permissioned and can’t be freely transferred. What we’re more likely to see is carefully managed connections between traditional finance and DeFi – think curated integrations with enterprise-level DeFi solutions or institutional investment pools – rather than completely open and permissionless deployments.

What happens to non-euro stablecoins in Europe under MiCA?

The new MiCA regulations focus heavily on stablecoins not issued in euros that are used for payments within the EU. These could face limits on how much can be used and will be more closely monitored if they become widely adopted. While people may still be able to buy and sell these tokens on regulated platforms, their use for everyday purchases could be restricted.

When could a digital euro arrive?

The European Central Bank is working on a digital euro for everyday use and investigating how to improve large-scale payments. While there’s no set date for release, any introduction would happen in phases, following legal requirements and testing.

What should corporate treasurers prioritize right now?

Connect different applications to our system in these ways: use public blockchains for open payments and managing funds; utilize bank-issued tokens for business-to-business processes and integration with existing financial software; and establish connections for large-scale settlements to control financial risk. We also need clear information from any token issuer regarding how tokens can be exchanged for value, the legal rights associated with them, a record of all transactions, and how issues will be handled.

2026-05-25 16:38