Speaking on the opening session of the second day of the FIA IDX conference in London, Don Wilson, the founder and chief executive of DRW, said Europe’s cautious approach to stablecoin could see that administration fall behind the US which is forging ahead with its stablecoin legislation.

Wilson told the delegation: “The Europeans have expressed some concerns about the potential for greater dollarisation in Europe because the US is embracing stablecoins. I think that’s a legitimate concern.”

He added: “Europe is not embracing this technology in the same way [as the US]. MiCA, the European crypto legislation, was implemented fully in December last year. To this day, we get different answers from different countries on how they interpret it. And it makes it almost impossible to conduct business in Europe.”

Europe’s Markets in Crypto Assets (MiCA) is the framework for crypto asset regulation in Europe, covering firms that issue and trade crypto assets including tokens.

Wilson went on to say this European “dysfunction” is holding back the ability for the private sector to innovate in this space in Europe.

The DRW head added: “The ECB (European Central Bank) has said stablecoin reserves need to be deposited at banks so you’re putting fractional banking risk into these instruments. That’s a disaster. Unless the ECB and the European Union change stance, it’s going to be very hard for a Euro-denominated stablecoin to gain meaningful traction.”

The US Senate passed on Tuesday a bill that paves the way for regulation to allow the issuance of a US dollar stablecoin, marking a major step forward for the crypto token.

A legal expert suggested last month the progress being made in the US on stablecoins is an issue for the UK administration which is also working on its own stablecoin regime.

“One challenge for the UK in regulating crypto assets is over stablecoins, considering US dollar stable coins are by far the greatest use case out there,” said Katten senior associate Christopher Collins.