The European Parliament’s committee approved draft digital euro legislation on June 23, marking a critical step for the project. This sets the stage for trilogue negotiations involving the European Parliament, EU member states, and the European Commission, with a goal to finalize adoption by the end of 2026.
The framework outlines both online and offline versions, with privacy features mirroring physical cash. Notably, a range of institutions, including banks and regulated crypto firms, will distribute the digital euro, marking a significant inclusion for the crypto sector under the EU’s Markets in Crypto-Assets regulation.
Holding limits on digital euro wallets are planned, though specifics are pending. The digital euro will be non-interest-bearing, ensuring it doesn't compete with bank deposits. Merchants will need to accept it as payment, equating it with cash.
Fernando Navarrete Rojas leads the proposal's legislative journey. The ECB has been exploring digital euro options since 2021, with a pilot program projected for late 2027 and potential launch by 2029.
The initiative aims to reduce the EU's reliance on U.S. payment networks, notably Visa and Mastercard. Currently, many eurozone payments rely on American-controlled infrastructure.
For the crypto sector, the participation of licensed firms as distribution channels could intensify competition between banks and crypto entities. This landscape change may pose threats to traditional stablecoin issuers within the eurozone.
Investors should monitor trilogue negotiation developments, details on holding limits, and which crypto firms aim to distribute the digital euro.