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A recent blog post from the European Central Bank (ECB) raised alarms about the implications of the US dollar’s dominance in the stablecoin market, especially in light of President Donald Trump’s recent signing of the GENIUS Act into law.

This trend could allegedly lead to increased borrowing costs for European nations, diminish the autonomy of the European Central Bank, and deepen geopolitical dependence on the United States. 

European Union Urged To Fast-Track Digital Euro

The ECB’s adviser, Jürgen Schaaf, claimed that the strategic advantages afforded to the US through its “stablecoin dominance” could allow it to finance its debt more cheaply while extending its global influence.

The post emphasizes the potential consequences for Europe, warning that reliance on dollar-based stablecoins for payments and savings could undermine the ECB’s control over monetary policy. 

According to Reuters, the market for euro-denominated stablecoins is currently minimal, with a market capitalization of less than 350 million euros, compared to similar cryptocurrencies from companies like Tether (USDT) and Circle (USDC). 

In light of this competitive landscape, the ECB’s adviser urged the European Union to accelerate the development of a digital euro and encourage the creation of more euro-based stablecoins.

Amid these tensions, the recently enacted GENIUS Act in the US has ignited fresh interest among traditional finance firms in dollar-pegged cryptocurrencies. 

Wall Street Giants Explore Opportunities In Stablecoins

Interactive Brokers Group, a brokerage firm with a market capitalization of around $110 billion, is reportedly considering launching its own stablecoin. 

The firm’s founder, Thomas Peterffy, indicated that while they are still evaluating how to implement these assets for customers, they recognize the transformative potential of blockchain technology in the broader financial landscape.

Interactive Brokers has already established partnerships with crypto platforms like Paxos and is an investor in crypto exchange Zero Hash, enabling it to offer trading in various cryptocurrencies. The firm is now focused on creating a system for instant, 24/7 stablecoin funding for brokerage accounts. 

However, Peterffy also expressed caution about the rapid adoption of cryptocurrencies, noting, “It’s basically hard to grasp its fundamental value.” He emphasized that while he is open to the idea of stablecoins, he remains skeptical about their intrinsic worth.

In a parallel development, Robinhood has launched its own stablecoin, the Global Dollar Network, in collaboration with other crypto platforms such as Kraken and Galaxy Digital. 

This stablecoin, issued by Paxos, is pegged to the US dollar and aims to facilitate transactions without the need for traditional banking systems. Similarly, asset manager and crypto exchange-traded fund (ETF) issuer WisdomTree recently unveiled its own stablecoin, USDW.

These developments are part of the progressive steps being taken in the US toward a more accommodative digital asset environment. Wall Street firms like JPMorgan, Citigroup, and Goldman Sachs are also exploring the potential of these assets for their operations. 

Featured image from DALL-E, chart from TradingView.com 

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A letter submitted this morning by the defense of Samourai wallet developers Keonne Rodriguez and William Ronergan Hill revealed that the Southern District of New York (SDNY) had suppressed clear evidence in criminal cases.

According to the filing, the prosecution had consulted Fincen about the feasibility of bringing in unauthorized money transmission fees for non-mandatory services before the developer charged them.

“Mixers like Samourai, who own private keys and do not detain cryptocurrency, strongly suggest that Samourai is not acting as an MSB,” Finsen told prosecutors.

In internal communications, the prosecutor says it could lead to fees based on “functional controls” of the code, perhaps referring to Samourai’s control over the user interface and the coin join server of the Samourai wallet. Prosecutors said such arguments were “never addressed in the guidance,” and admitted that “that could be a difficult argument.”

Communication between Fincen and SDNY was revealed following the so-called Brady request, ordering the government to hand over evidence that could exonerate the accused developer.

The government will need to hand over the evidence exempted to the defense two weeks after filing the latest indictment. The later disclosure of such highly relevant material may mislead the courts, arguing that the letters have an impact on both the bail requirements imposed on the developer and the tendency of judges to refuse to file a motion for rejection.

The defense is currently seeking a hearing to determine potential remedies for SDNY’s actions, including the dismissal of the charges.

“It’s hard to imagine a clear example of “prosecutorial regulation” than what we have here,” said the defense, referring to the recent Blache memo. “The relevant regulators telling prosecutors that Samourai’s wallets are not gold senders have indicted the same general guidance that Rodriguez and Hill relied on to guide their actions, and prosecutors have stepped forward and run a money services business that is not exempt anyway.”

Fincen’s attitude towards non-lawful service providers shared with SDNY echoes 2019 guidance. This states that “cryptocurrency wallet providers will be classified as transmitters if the host is completely independent of their value (contractually mandated to access value only from the owner.”

Advocacy groups and legal scholars have long argued that the prosecution of Samourai wallet developers and the prosecution of tornado cash developers Roman Storm and Rome Semenov are clear violations of Finsen guidance.

Samourai’s Brady Request was successful, but a similar request was rejected last year to try to disclose to the government that it contains “materials that have not yet been produced from materials received from OFAC and Fincen (substantial communications with these agencies).

As Storm points out in X, he was arrested the same day he consulted the prosecutor of Samourai Wallet about the feasibility of unauthorized money transmission fees, making it seem that SDNY is even more aware of the spread of that charge throughout Storm’s prosecution.

“Fincen explicitly informed SDNY prosecutors that no remittance license is required for Samourai Wallet’s non-mandatory design, but the DOJ has indicted the developer. “The prosecutor exemplifies regulations through criminal prosecution, directly opposes the directions of the AG Blanche Deputy Bureau, and undermines the Trump administration’s crypto policy.”

“Brady Violation,” wrote JW Verret, an anti-money laundering expert, in X.

“The fact that the prosecutor attempted to withhold this information from the defense is a serious ethical violation and could lead to a case,” Verret told Bitcoin Magazine. “That’s if the DOJ doesn’t drop it all together, given that the main justice effectively ordered such cases to be removed.”

“Like we said,” writes Peter Van Valkenburgh of Conicenter in X.

“If they are not a remittance under Fincen’s guidance, the defense said in the letter.

This is a guest post by L0LA L33TZ. The opinions expressed are entirely unique and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.

Bank of England Governor Andrew Bailey expressed skepticism about the role of central bank digital currencies (CBDCs) in financial stability, emphasizing that central banks must maintain control over monetary transmission through the banking system.

Speaking at the University of Chicago Booth School of Business in London on Feb. 11, Bailey reinforced that while financial markets are evolving, the principles underpinning money issuance and liquidity must remain intact.

Bailey highlighted that non-bank financial institutions (NBFIs) are playing an increasingly significant role in global finance, prompting central banks to adapt their risk management frameworks. However, he made clear that this shift does not warrant broadening access to central bank money beyond traditional banks.

“There is no rationale for standing facilities for non-banks as they do not create money.”

Bailey said, signaling that the introduction of a digital pound would not alter the BoE’s core approach to monetary stability.

Undermining commercial banks

With several major economies exploring CBDCs to modernize payments and financial infrastructure, Bailey emphasized that any digital currency issued by the Bank of England must preserve the existing financial framework.

Bailey confirmed that the Bank of England is still studying the feasibility of a digital pound, working in collaboration with the UK government. However, he stressed that while digital technologies offer new possibilities for payments, the decision to introduce a CBDC must be based on clear economic benefits rather than speculative trends.

Bailey said:

“We must have it if it’s proven that we need it.”

While he acknowledged that a digital pound could serve as an additional payment option, he warned against undermining the fundamental role of commercial banks as intermediaries.

Bailey also stressed that the concept of central bank liquidity must remain bank-centric. He reinforced that a CBDC would not be intended to replace private-sector financial institutions but rather complement the system.

According to Bailey:

“The standing provision of liquidity to support the so-called singleness of money goes only to the banks.”

In January, the Bank of England announced plans to launch a “Digital Pound Lab” later this year as part of an exploratory phase to determine the potential design and use cases of a UK CBDC.

Bailey’s stance suggests that while the Bank of England remains open to digital currency advancements, it will not rush to introduce a CBDC or expand stablecoin adoption without comprehensive regulatory safeguards in place.

Stablecoins must meet ‘high bar’

Bailey also discussed Bitcoin (BTC) and stablecoins during his speech. He characterized Bitcoin as solely a speculative asset, while acknowledging that stablecoins could serve some monetary functions.

However, he warned that stablecoins must meet a “high bar” of regulation if they are to operate within the payments ecosystem.

Bailey’s remarks come amid growing discussions on stablecoin regulation, particularly as the Bank of England and the UK government continue to assess their role in digital finance. He reiterated that while stablecoins are backed assets, they also exhibit characteristics similar to mutual funds, making them more opaque than traditional money.

Bailey said:

“I think we will have to set a high bar there because the expectations are that people using things for payments are appropriately set like money.”

His comments follow recent global shifts in regulatory approaches to crypto assets. Bailey acknowledged that the election of pro-crypto US President Donald Trump could reshape global regulatory dynamics but noted that it remains unclear what specific reforms his administration will pursue.

According to Bailey:

“The Biden administration, particularly the SEC, had got into a situation where it couldn’t get a regulatory framework and was using action through the courts. That was becoming more challenging, frankly. So there is a gap there in terms of having a consistent regulatory framework, but we don’t know what that’s going to be.”