Payments & Stablecoins

As part of Vienna Blockchain Week 2025, a high-level panel discussion took place on the topic Payments and Stablecoins. The conversation explored how stablecoins are evolving from a niche product into a core component of the modern financial system. The panel addressed global market dominance, regulation, liquidity, interest rate imbalances, cybersecurity, and Europe’s role between innovation and oversight.

The discussion was moderated by Sebastian Becker, Managing Director at Bundesblock, and featured Simon Seiter, Chief Product Officer at AllUnity, Mazurka Zeng, Managing Director and CEO of Bybit Europe, Martin Froehler, Founder and CEO of the decentralized stablecoin USPD (US Permissionless Dollar), and Olvis E. Gil Ríos, Ambassador for the Stellar Europe Chapter. Together, they provided deep insights into the opportunities and structural challenges surrounding stablecoins, from financial infrastructure to regulatory frameworks and institutional adoption.

Global Landscape and Market Dominance

Today, the stablecoin market is overwhelmingly dominated by USD-backed projects. Roughly 99.9 percent of all blockchain-based payments are settled using USDT or USDC, which together exceed 140 billion USD in market capitalization. These two stablecoins dominate exchange pairs, DeFi protocols, and institutional settlements.

ADVERTISEMENTFor Europe, this creates a structural dependence on U.S. issuers and their regulatory environment. Discussions about Euro-denominated stablecoins or alternative decentralized models remain largely theoretical, as liquidity and real-world use cases are scarce. The global market’s trust, regulatory clarity in the U.S., and the deep integration of dollar stablecoins into the financial ecosystem have solidified their dominance.

Regulation and European Sovereignty

With the introduction of the Markets in Crypto-Assets Regulation (MiCA), the European Union has established a unified framework for issuers and service providers in the crypto sector. Its purpose is to enhance transparency, consumer protection, and financial stability.

However, the panel noted that MiCA’s complexity and cost structure pose major challenges for innovation. While it provides legal certainty, it also restricts certain financial features such as interest-bearing stablecoins. Projects like EURe, Monerium EUR, and Membrane EUR remain small in scale, with minimal adoption and liquidity.

ADVERTISEMENTAt the same time, the European Central Bank is developing the digital euro (CBDC), expected no earlier than 2028. It aims to complement cash and strengthen monetary sovereignty, but until then, private U.S. stablecoin issuers will likely continue to dominate the market.

Liquidity, Interest Rates, and Competitiveness

Liquidity emerged as one of the most pressing issues for European stablecoin projects. Without deep markets and institutional participation, Euro-based tokens struggle to gain traction. This is not only a technical but primarily an economic challenge.

A key factor is the interest rate differential. U.S. issuers benefit from high Federal Reserve rates by investing reserves in short-term Treasuries, earning substantial returns. These revenues enhance their stability and allow them to incentivize adoption indirectly. Under MiCA, European issuers are prohibited from similar practices, resulting in a structural disadvantage in profitability and liquidity.

Centralized versus Decentralized Models

Martin Froehler introduced the USPD, a decentralized stablecoin that operates without custodial institutions. It relies on cryptographic verification instead of trust and is designed for users who value transparency, censorship resistance, and verifiable proof of reserves.

In contrast, centralized stablecoins such as USDC and USDT are backed by fiat reserves held with banks, providing operational simplicity and strong integration with the existing financial system. The panel agreed that both models have their place: decentralized designs for open and transparent ecosystems, and centralized models for scalable institutional adoption.

Banking Partnerships and Reserve Management

European issuers are increasingly forming partnerships with traditional banks to manage fiat reserves securely and ensure regulatory compliance. AllUnity, for instance, already collaborates with several reserve banks and plans to expand this network as it scales.

ADVERTISEMENTMinting and redemption often occur via virtual IBANs, where institutional clients deposit fiat currency, automatically triggering on-chain issuance. However, banks typically charge service fees for account and transaction management, adding operational costs. Over time, such hybrid models combining regulated banking infrastructure with blockchain

Cybersecurity and Technical Resilience

Cybersecurity remains a major concern in financial infrastructures. According to European security agencies, there are more than 10,000 cyberattacks per day targeting financial systems. The panel emphasized that properly implemented on-chain architectures can, in many cases, offer higher resilience than centralized systems.

Technologies like smart contract audits, multisignature verification, and on-chain transparency strengthen system integrity. Fully permissionless projects such as USPD demonstrate that decentralization can minimize single points of failure. Nonetheless, off-chain interfaces, bank connections, APIs, and custodial gateways remain potential attack vectors that require constant oversight.

Global Perspective and Emerging Markets

Stablecoins are increasingly vital in economies suffering from high inflation or currency instability. In countries such as Argentina, Nigeria, and Kazakhstan, stablecoins are used as a store of value and a medium for everyday payments, providing an alternative to rapidly devaluing local currencies.

Olvis E. Gil Ríos from the Stellar Foundation highlighted the humanitarian potential of blockchain payments, particularly for cross-border transfers supporting hospitals and NGOs in politically unstable regions. Such use cases demonstrate that stablecoins are not only financial instruments but also enablers of social and economic resilience.

Europe’s Strategic Role and Outlook

For Europe, the challenge lies in balancing regulation with competitiveness. MiCA creates trust but limits flexibility, while the digital euro remains years away. The next three years leading up to 2028 will therefore be critical.

Europe must foster a thriving ecosystem that combines innovation, liquidity, and regulatory clarity. This includes enabling Euro-denominated stablecoins, defining interest-rate mechanisms, and encouraging collaboration between banks, regulators, and blockchain innovators.

Stablecoins are no longer merely a bridge between crypto and traditional finance. They have become a core foundation for digital payments, tokenization, and modern financial architecture. Whether Europe emerges as a leader or a follower in this transformation will depend on the policies, partnerships, and innovations forged in the years ahead.

Related articles from Vienna Blockchain Week 2025:

Vienna Blockchain Week 2025: Bybit and Venionaire make big announcements in Vienna

Vienna Blockchain Week 2025: Where Innovation Meets Regulation in the Heart of Europe

Tokenized Real World Assets on the Path to the Mainstream

DeFi Panel Discussion – Vienna Blockchain Week 2025