A silent but structural change is taking place in the money we use every day. In the European Union, a third official form of money usable in payments now exists. In addition to physical euros and euros recorded in bank accounts, there is now the tokenized euro in Web3. And no, we are not talking about cryptocurrencies or so called DeFi stablecoins.
It is important to begin by clearing the noise. DeFi, decentralized finance, operates outside the regulated perimeter. It can innovate, experiment, and speculate, but it does not replace the legal monetary system. DeFi stablecoins are not fiat currency and cannot replace it within the regulated space. When a merchant says it accepts this type of asset, what it actually does is immediately convert it into official currency, charging a fee for the process. If it does not, it risks regulatory noncompliance. This is not ideology. It is legal architecture.
What the European Union has regulated, and rightly so, are not speculative stablecoins but something far more solid: electronic money tokens, or EMTs, as defined in Title IV of the Markets in Crypto Assets Regulation. This is where the true tokenization of money begins.
EMTs are, legally, electronic money. Within the Single Euro Payments Area, an EMT is equivalent to a deposited euro. The difference lies not in value but in the circulation mechanism. Instead of transfers between bank accounts, there are transfers between digital wallets. Instead of successive layers of clearing, there is direct settlement on technological infrastructure. Less friction, fewer intermediaries, and lower structural cost.
This is not merely operational efficiency. It is a paradigm shift. For decades, electronic payments have depended on heavy networks, opaque fees, and mandatory intermediaries. Regulated tokenization has now introduced technological competition into the very act of paying.
Retail understands this quickly: less dependence on point-of-sale terminals, fewer accumulated fees, and reduced operational complexity. For the financial system, this means modernization.
It is important to emphasize that EMTs are not stablecoins in disguise. There is technological proximity, but not legal equivalence. DeFi stablecoins are private stores of value. EMTs are regulated electronic money. The difference is the same as that between a banknote issued by a central bank and a casino chip. Both circulate. Both hold value. Only one is legal tender.
The practical application of the regulation began in July 2024 in the most prepared Member States. A limited group of financial institutions quickly moved forward with the first issuances. Portugal, consistent with its tradition of arriving late to revolutions it often claims to support, was delayed by political blockages over the allocation of supervisory powers. The framework was eventually finalized, and issuances have recently been announced by Bison Bank. Better late than never, but delay carries a cost in an increasingly digital world where first movers hold an advantage.
Meanwhile, in central Europe, a consortium of major banks created last year a dedicated entity focused on EMT issuance. When cooperative banking moves early, it is usually because it sees risk or opportunity. Here, it likely sees both.
What are they for, the pragmatic reader may ask. Today, not much. Tomorrow, a great deal.
In everyday payments, EMTs can already deliver several of the objectives promised by a future Digital Euro, without requiring a new centralized monetary infrastructure and without disintermediating retail banking. That detail is far from minor, as it avoids the systemic liquidity shock that a pure Digital Euro could impose on retail banks.
But the real impact is not in paying for coffee slightly more cheaply. It lies in enabling conditional payments, automatic settlement embedded in digital contracts, programmable financial assets, and entire value chains operating with money issued and transferred directly on digital infrastructure, with the speed, programmability, and reach of the internet, while remaining fully regulated.
History shows that new technologies rarely prevail by doing the same things better. They prevail by making possible what previously did not exist.
That is what is now beginning.
Paulo Cardoso do Amaral, Professor at CATÓLICA-LISBON