European Union, MiCA license, digital euro, crypto regulations, European Parliament Digital Euro CBDC. Photo by BeInCrypto Fourteen of Europe’s leading banks are pushing back against the European Central Bank’s plan for a digital euro. They argue the project could weaken private payment systems ahead of crucial parliamentary discussions in Brussels this week.  Lawmakers are now calling for a scaling back of the initiative, arguing that it lacks clear benefits and risks duplicating market-led innovation. M ...

Core Insights - The European Central Bank (ECB) has selected Portuguese startup Feedzai to assist in fraud prevention for its upcoming digital euro currency, with a contract valued at up to 237.3 million euros ($278.69 million) [1][3] - The project aims to enhance the euro zone's financial autonomy from the United States, particularly in response to the dominance of Visa and Mastercard and the rise of stablecoins [4] Company Overview - Feedzai specializes in artificial intelligence and processes approximately $8 trillion in payments annually for clients, including Novobanco and Wio Bank [5] - The company recently secured $75 million in funding from various investors, including Lince Capital and Iberis Capital [5] Project Details - The four-year agreement with the ECB includes an option to extend for up to 15 years, with an estimated value of 79.1 million euros and a maximum cap of 237.3 million euros [3] - Feedzai, along with its subcontractor PwC, will develop an AI model to assess the fraud risk of digital euro payments based on customer behavior and transaction history [2] Legislative Context - The ECB is currently awaiting legislative approval for the digital euro, which it anticipates receiving by mid-next year, aiming for a launch in 2029 [4]

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Core Insights - Nine major European banks are forming a consortium to issue a MiCA-compliant euro stablecoin by 2026, aiming to establish a regulated standard for digital payments as the ECB's digital euro project stalls [2][5][8] Group 1: Consortium Formation - The consortium includes banks such as ING, Banca Sella, KBC, Danske Bank, DekaBank, UniCredit, SEB, CaixaBank, and Raiffeisen Bank International, representing eight countries and various types of lenders [3] - A new entity has been incorporated in the Netherlands, and the group is applying for an electronic money institution (EMI) license from De Nederlandsche Bank [3] Group 2: Stablecoin Structure and Compliance - The stablecoin will be backed 1:1 with euro reserves held in segregated accounts and invested in low-risk, liquid assets [4] - The consortium plans to leverage blockchain technology for transparency, programmability, and instant settlement while ensuring compliance with MiCA's stringent requirements [4] Group 3: Market Positioning - The euro stablecoin is expected to challenge the dominance of dollar-backed stablecoins, which currently hold a significant share of the global stablecoin market [5] - The initiative reflects European banks' desire to defend the euro's role in the global economy amid frustrations with the ECB's slow progress on its digital euro [5][6] Group 4: Future Implications - The project aims to provide European businesses and consumers with earlier access to programmable money within a regulated framework, potentially closing the gap with faster-moving markets like the U.S. and Asia [9] - If successful, this euro stablecoin could represent a significant step towards integrating traditional finance with blockchain technology, accelerating Europe's transition to a hybrid system of public and private digital money [9]

Core Viewpoint - The European Union finance ministers are aiming to establish a unified stance on the creation of a digital euro currency, which could serve as an alternative to the currently dominant U.S.-based payment systems like Visa and MasterCard [1] Group 1 - The digital euro currency initiative is part of the EU's broader strategy to enhance its financial sovereignty and reduce reliance on foreign payment systems [1] - The discussions among finance ministers are expected to focus on the technical and regulatory frameworks necessary for the implementation of the digital euro [1] - The potential launch of a digital euro could significantly impact the European payment landscape, providing consumers and businesses with more options [1]

Digital Euro & Blockchain - EU is considering a stablecoin on a public blockchain instead of a CBDC [1] - Ethereum (ETH) or Solana (SOL) are potential blockchain candidates [2] - A euro stablecoin backed by a state actor changes the landscape compared to private stablecoins like Tether & Circle [1] Implications for Blockchain Networks - Launching a digital euro on Ethereum or Solana would transform them into critical financial infrastructure [1] - Currently neutral chains, ETH & SOL would require Europe to actively secure and develop them [1] - Europe would need to run validators, stake at scale, secure the network, and contribute to resilience via public funding [2] Global Competition - The EU's move could trigger a global race for ETH/SOL if other countries like China and Japan launch their own stablecoins on public chains [1] Regulatory Context - The "Genius Act" influenced EU officials to rethink plans for the digital euro [2]