ING is teaming up with crypto firms to launch a euro-backed stablecoin.

This isn't the first push for a euro-pegged digital currency. French startup Angle Labs launched agEUR, and fintech Monerium recently teamed up

Dutch banking giant ING is joining forces with crypto firms to launch a euro-backed stablecoin, aiming to reduce the dominance of U.S. dollar-pegged stablecoins in the market, Bloomberg reports.

The initiative aligns with the European Central Bank's (ECB) plans for a digital euro and signals a broader move by private institutions to provide regulated and reliable digital currency options in the EU.

Currently, major stablecoins like Tether's USDT and Circle's USDC, which are pegged to the U.S. dollar, still hold a dominant share of the stablecoin market. However, as the ECB introduces its digital euro and the crypto sector expands, there's a growing need for a balanced ecosystem with a strong presence of euro-backed stablecoins.

"We are working with crypto firms to launch a euro stablecoin," an ING spokesperson told Bloomberg.

This development follows French startup Angle Labs' launch of agEUR earlier this year and fintech Monerium's partnership with Cosmos-based Noble to introduce EURe, touted as Europe's first fully regulated euro stablecoin.

The report by Kaiko Research indicates that over 98% of stablecoin volume is concentrated in dollar-linked assets, exposing Europe to forex risks and limiting its role in the digital economy.

"The hemiplegic nature of the global financial system is now spilling over into the digital asset markets," the researchers stated in March.

Stablecoins, which aim to combine the speed of crypto with the stability of traditional money, have become increasingly popular in recent years. They are digital currencies pegged to a stable asset, typically a fiat currency.

However, stablecoins are also associated with risks, such as liquidity crunches and de-pegging issues, which can have significant implications for users and the broader market.

Earlier this month, the ECB unveiled plans to begin rolling out its digital euro by 2025, marking a significant step in the eurozone's efforts to introduce a central bank digital currency (CBDC).

The digital euro project, named "numérique," will be launched in partnership with major commercial banks, aiming to provide a seamless integration of the digital euro into the existing financial system.

The initiative will involve the creation of digital euro wallets that users can easily access and use for everyday transactions. Moreover, the project will focus on wholesale payments, interoperability with private stablecoins, and tokenization of securities.

The project builds upon the ECB's previous explorations into a digital euro, which began in 2020 with a consultation phase that engaged various stakeholders in the financial sector, academics, and the public.

In October 2021, the ECB announced its decision to move forward with the development of a digital euro, aiming for a phased rollout of the currency by 2025.

This project aligns with broader trends in central banking, as several central banks around the world are investigating or already implementing CBDCs to remain relevant in the evolving financial landscape.

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