Criticism and Competitive Context
Paolo Ardoino, Chief Technology Officer of Tether, publicly criticized the European Union’s digital euro project, casting doubt on its feasibility and highlighting tensions between central bank digital currencies (CBDCs) and private stablecoins like USDT. Ardoino argued that the EU’s Markets in Crypto-Assets (MiCA) regulation is overly restrictive and could hinder innovation, positioning Tether as a functional alternative to the digital euro. His remarks underscore broader concerns about the digital euro’s relevance in a market where private stablecoins already dominate.
Risks, Obstacles, and Timeline
Privacy remains a central issue. Despite the European Central Bank’s (ECB) assurances of high privacy standards, skeptics worry about potential financial surveillance and traceability, which could limit public adoption.
Banking disintermediation is another critical risk. The movement of deposits from commercial banks to the ECB could strain liquidity, especially for vulnerable institutions. Proposed holding limits may not fully mitigate this risk.
Regulatory and coordination challenges among EU member states have slowed progress. Bureaucratic hurdles and divergent national interests continue to delay final decisions on design and implementation.
Competition from stablecoins like USDT, which already enjoy market dominance, adds pressure. Tether’s potential expansion into the U.S. with a new dollar-pegged stablecoin could further overshadow the digital euro’s launch.
Technical implementation risks persist. The ECB’s reliance on external partners for interoperability and programmability, such as Quant Network, suggests internal limitations in developing a seamless digital euro infrastructure.
The digital euro is currently in its preparation phase, with a key milestone scheduled for October 2025. A potential launch is estimated around 2028, though unresolved issues could delay this timeline.
Ardoino’s criticisms highlight unresolved challenges privacy, banking stability, regulatory cohesion, and competitive pressure that will shape the digital euro’s adoption and impact. The ECB’s next steps in October 2025 will be crucial for addressing these concerns and determining the project’s viability for users, banks, and regulators.
