Online vs. Offline CBDCs — The Privacy Battle Dividing the EU

ccn.comPublicado a 2025-12-25Actualizado a 2025-12-25

Resumen

The EU is divided over the design of its proposed digital euro, with a key conflict emerging between online and offline functionality. The Council of the EU supports a hybrid model that includes both online and offline capabilities. In contrast, privacy-focused members of the European Parliament advocate for an offline-only version, arguing it offers stronger, cash-like privacy by enabling peer-to-peer transactions without centralized tracking. They warn that an online system could allow excessive surveillance of consumer spending. The European Central Bank and European Commission favor the hybrid approach but face opposition from data protection authorities concerned about data minimization. With negotiations set for 2026, the outcome will determine the balance between privacy and functionality in the EU's digital currency.

Key Takeaways

The Council of the EU has adopted a digital euro negotiating position that favors online and offline functionality.
However, privacy hawks in the European Parliament are pushing for an offline-only digital currency.
As the two sides prepare for negotiations in 2026, privacy has emerged as the key battle line.

As the EU’s digital euro inches closer to realization, policymakers are split between two camps with competing visions for the central bank digital currency.

In one model, offline CBDCs behave like digital cash, with strong privacy built in by design.

However, another, more ambitious approach envisions the digital euro as a comprehensive online payment instrument that offers the same functionality as cards and digital wallets.

New Trending Crypto Wallet Offers

Tangem

promotions

Trusted & Secure

Coins

Claim Offer

BitBox

promotions

Trusted, Secure & Crypto Friendly

Coins

–

Claim Offer

Blockstream

promotions

Trusted, Secure & Crypto Friendly

Coins

–

Claim Offer

The Two Digital Euros: Online Accounts vs. Offline Tokens

The distinction between online and offline versions of the CBDC emerged early on in discussions over the digital euro, with a string of EU policy documents exploring the pros and cons of each model since 2020.

An online digital euro would function like today’s electronic payments, with accounts tied to individual consumers and businesses, and transactions validated through infrastructure operated by banks and other regulated Eurosystem participants.

Meanwhile, offline CBDCs more closely resemble traditional cryptocurrencies, with tokens that move between wallets on a peer-to-peer basis, eliminating the need to update balances on a centralized ledger.

Privacy Hawks Favor Offline-Only CBDC

In the debate over online versus offline digital euros, privacy is a central political constraint.

The European Central Bank (ECB) has repeatedly framed privacy as “by design,” arguing that it wants the digital euro to meet very high privacy standards compared with existing electronic payment rails.

But that prospect holds much more weight with an offline CBDC, which promises a cash-like degree of anonymity, at least for small payments.

Alongside the European Commission, the ECB favors a hybrid system, with larger payments requiring online validation, but some offline functionality for low-value payments.

However, after the Commission outlined a proposal for online and offline functionality in 2023, privacy hawks in the European Parliament pushed back, arguing that online CBDCs could grant centralized authorities unprecedented visibility into consumers’ daily spending.

They argued that the proposal’s privacy guarantees for online CBDCs lacked legal grounding and would require users to simply trust that their payment data wouldn’t be accessed by centralized authorities.

That view is backed by the European Data Protection Board (EDPB) and the European Data Protection Supervisor (EDPS), which have warned that the systematic logging of online payments risks violating EU data-minimization principles.

Council vs. Parliament

Since 2023, Members of the European Parliament (MEPs) have increasingly rallied around an offline-first, or even offline-only, digital euro.

But on Dec. 19, the EU Council representing Member States backed a negotiating position that more closely aligns with the European Commission’s 2023 proposal.

Now, the EU’s two decision-making branches are on a collision course.

With negotiations set to take place throughout 2026, the future of the digital euro project rests on whether or not the Council can convince enough MEPs to back online CBDCs.

Critics of online digital euro payments can be found across the political spectrum.

With diverse parliamentary alliances expected to push for strong privacy protections for any online functionality, the Council will likely need to offer legal guarantees that have been absent from the discussion so far.

Preguntas relacionadas

QWhat are the two competing models for the digital euro being debated in the EU?

AThe two competing models are an online digital euro, which functions like electronic payments with accounts tied to individuals and validated through bank infrastructure, and an offline digital euro, which operates like digital cash with peer-to-peer transactions and no need for a centralized ledger.

QWhy do privacy advocates in the European Parliament favor an offline-only digital euro?

APrivacy advocates favor an offline-only digital euro because it offers cash-like anonymity for transactions, especially for small payments, and prevents centralized authorities from having unprecedented visibility into consumers' daily spending, which they argue is a risk with online CBDCs.

QWhat is the position of the EU Council regarding the digital euro's functionality?

AThe EU Council adopted a negotiating position on December 19 that favors a hybrid system with both online and offline functionality, aligning closely with the European Commission's 2023 proposal.

QWhat concerns have data protection authorities raised about the online digital euro model?

AThe European Data Protection Board (EDPB) and the European Data Protection Supervisor (EDPS) have warned that the systematic logging of online payments risks violating EU data-minimization principles and lacks strong legal grounding for privacy guarantees.

QWhen are negotiations between the EU Council and the European Parliament on the digital euro expected to take place?

ANegotiations between the EU Council and the European Parliament are set to take place throughout 2026 to resolve the differences in their positions on the digital euro's design and functionality.

Lecturas Relacionadas

Must-Watch Events Next Week｜CLARITY Act Could Face Senate Vote; SpaceX, Circle to Report Earnings (8.3-8.9)

**Summary: Key Events and Developments to Watch (August 3-9)** The upcoming week is marked by significant financial disclosures, key legislative deadlines, and notable product updates. **Major Financial Events:** Several companies are scheduled to release their Q2 2026 earnings. American Bitcoin (ABTC) will report on August 3, followed by SpaceX and Hut 8 Mining Corp. on August 4, and Circle on August 5. Notably, a significant portion of SpaceX shares (up to 12% of total shares) will be unlocked on August 6 following their earnings release. **Key Legislative Deadline:** The U.S. Senate faces an August 7 deadline to secure 60 votes for the CLARITY Act, a bipartisan bill aiming to establish a federal regulatory framework for cryptocurrencies. The Senate may hold a full vote on the bill during the week. **Economic Data:** The U.S. July Non-Farm Payrolls report will be released on August 7, providing crucial labor market data. **Technology & Product Updates:** * **Shutdowns:** DeFi portfolio tracker Zapper and wallet app Ctrl Wallet will cease operations on August 3. * **Upgrades:** LayerZero will deprecate its v1 relayers on August 3. XRP Ledger's new version 3.3.0, featuring five new functions, is expected next week. * **AI:** Elon Musk announced that the advanced Grok 4.6 AI model is set for release around August 7. * **Bitcoin:** The BIP-110 forced signaling for a potential Bitcoin network change is scheduled to begin around August 8. **Other Notable Events:** Chinese robotics firm Unitree Tech has set its preliminary price inquiry for its IPO for August 5. South Korean exchange Upbit will delist AQT and AERGO tokens on August 3.

marsbitHace 16 min(s)

Must-Watch Events Next Week｜CLARITY Act Could Face Senate Vote; SpaceX, Circle to Report Earnings (8.3-8.9)

marsbitHace 16 min(s)

Stocks Are Plummeting More Sharply Than Cryptocurrencies. Where Has the Money Gone?

Stock Markets Plunge Deeper Than Cryptocurrencies: Where Did the Money Go? In late July, Seoul's Kospi index triggered circuit breakers for two consecutive days, plummeting over 40% from its June high. The collapse was led by heavyweight stocks like SK Hynix, whose record profits still disappointed investors, and devastating leveraged ETFs, with one major product losing over 83% of its value. This signaled a global, forced deleveraging targeting the most crowded trades. Interestingly, while stocks exhibited extreme volatility akin to crypto markets, Bitcoin rose nearly 15% in July after a prior steep drop. Analysis shows the money fleeing equities did not flow into Bitcoin. Instead, Bitcoin had already absorbed its sell-off in May-June, when U.S. spot Bitcoin ETFs saw historic outflows. The true safe-haven beneficiary was gold, whose price rose over 20% year-on-year, highlighting a decoupling between Bitcoin and gold as "digital gold." The sell-off was a targeted unwinding of leveraged positions in tech and semiconductors, accelerated by broker-dealer risk management and shifts in the AI narrative, including new competition from Chinese memory chipmakers. The retreat path was clear: from high-valuation tech stocks to cash and U.S. Treasuries, then to gold. For Bitcoin to attract sustained institutional inflows, conditions like eased global liquidity pressure, a "soft-landing" Fed rate cut, and U.S. regulatory clarity via legislation like the stalled CLARITY Act are needed. Currently, Bitcoin is not a safe haven but an already-cleared asset. Its low correlation with tech stocks, however, makes it a potential diversification play for institutional portfolios once the storm passes. The money isn't here yet, but the positioning is underway.

marsbitHace 16 min(s)

Stocks Are Plummeting More Sharply Than Cryptocurrencies. Where Has the Money Gone?

marsbitHace 16 min(s)

In Conversation with Ray Dalio: We Are Currently in an AI Bubble, with 1% of My Portfolio in Bitcoin

Ray Dalio, founder of Bridgewater Associates, warns in an interview that the current AI boom shows classic bubble characteristics, which could lead to significant economic downturns as seen in past cycles like 1929 or 2000. He explains that speculative enthusiasm, fueled by debt and overvaluation, often precedes a crash when rising rates or taxation force asset sales, causing widespread losses and recession. Dalio also outlines his "Big Cycle" theory, describing an approximate 80-year pattern where widening wealth gaps, massive government deficits, and shifting geopolitical power (like China's rise) create internal conflict and global instability. He emphasizes that we are in a late-cycle, transitional phase where traditional powers like the US and UK face decline. For personal wealth protection, Dalio advises diversification beyond cash into assets like stocks, bonds, real estate, and particularly gold, which he prefers over Bitcoin. While he holds about 1% of his portfolio in Bitcoin as a non-printable hard asset, he views gold as more secure from technological or governmental threats. Regarding AI's impact, Dalio believes it will disproportionately benefit capital owners, worsening inequality by replacing both physical and cognitive labor. He suggests that human intuition and emotional intelligence, combined with AI, will be key for future workers. On taxation, Dalio argues that wealth taxes are impractical and risk triggering asset sell-offs, reducing productive investment. He points to the UK as a cautionary example of debt, low productivity, and political strife. Geopolitically, Dalio foresees a more regionalized world, with the US showing weakness in prolonged conflicts like with Iran, akin to past imperial declines. The ideal outcome, he suggests, is coexisting powerful blocs (e.g., Americas, China-Asia Pacific) without major war.

marsbitHace 4 hora(s)

In Conversation with Ray Dalio: We Are Currently in an AI Bubble, with 1% of My Portfolio in Bitcoin

marsbitHace 4 hora(s)

Daily 7.2 Trillion KRW: Foreign Capital's Record Net Buying on Friday! Wall Street Says Headwinds for Korean Stock Fund Flows Have Subsided

South Korean stock market sees a dramatic shift in fund flows. On July 31, foreign investors made a record net purchase of approximately KRW 7.2 trillion in KOSPI stocks, marking a fundamental reversal from the persistent large-scale net outflows seen in previous months. This contributed to a significant narrowing of foreign net selling in July to KRW 9.8 trillion, down sharply from KRW 48.4 trillion in June and KRW 44.5 trillion in May. Simultaneously, domestic institutional pressure eased. South Korean pension funds and asset managers turned to a net buying position in July, purchasing KRW 1.0 trillion worth of KOSPI shares, contrasting with net sales in May and June. Market volatility is expected to be dampened by new financial regulations. Effective July 31, the Financial Services Commission tightened access for retail investors to single-stock leveraged ETFs by raising the minimum cash deposit requirement. Trading volumes for these products subsequently dropped to about 50% of their monthly average. Citigroup Research maintains its year-end KOSPI target of 10,000 points. The firm cites several supportive factors: the substantial easing of headwinds from capital outflows, a robust fundamental outlook for the semiconductor sector, historically low market valuations, strong economic fundamentals, and the potential for policy support from financial authorities if needed.

marsbitHace 4 hora(s)

Daily 7.2 Trillion KRW: Foreign Capital's Record Net Buying on Friday! Wall Street Says Headwinds for Korean Stock Fund Flows Have Subsided

marsbitHace 4 hora(s)

Breaking! OpenAI's Next-Gen AI Solves 10 Fields Medal-Level Problems

OpenAI's next-generation AI model Astra achieves breakthroughs in 10 long-standing mathematical conjectures. The results, including constructing the first known infinite, finitely presented non-sofic group—resolving a major question since 1999—and advancing the high-dimensional sphere packing problem beyond a 46-year-old barrier, are detailed in a 249-page paper. Key proofs have been formally verified using Lean 4. The AI also refuted a rigidity conjecture by Fields Medalist Alain Connes. According to OpenAI, generating these proofs cost under $2,000. Experts describe the findings as potentially Fields Medal-worthy and a landmark moment for both mathematics and AI, showcasing the model's ability to produce profound, human-like reasoning across diverse fields like group theory, geometry, and operator algebras.

marsbitHace 5 hora(s)

Breaking! OpenAI's Next-Gen AI Solves 10 Fields Medal-Level Problems

marsbitHace 5 hora(s)

Trading

Spot