ECB warns about Trump's supportive cryptocurrency policy regarding the stability of European finance

The European Central Bank (ECB) has expressed deep concerns about President Donald Trump’s pro-cryptocurrency agenda, warning that the wave of dollar-backed stablecoins could threaten financial stability in the euro area and undermine the EU’s new cryptocurrency regulatory framework.

In a confidential policy document obtained by Politico, the ECB called on the European Commission to reconsider the Regulation on Markets in Crypto-Assets (MiCA), expressing concerns that current regulations may not be robust enough to cope with the impact of strong cryptocurrency reforms from the U.S.

These reforms include two proposed bills, STABLE and GENIUS, which according to forecasts by analysts at Standard Chartered, could push the supply of dollar-backed stablecoins to as much as $2 trillion by 2028, up from around $240 billion currently.

Concerns about “Contagion”

MiCA, which came into effect at the beginning of this year, is hailed as the world’s first comprehensive cryptocurrency regulation. However, the ECB currently believes that it may not be sufficient to protect the EU from the influence of a rapidly expanding U.S. stablecoin industry.

ECB President Christine Lagarde and Director of Digital Payments Piero Cipollone both expressed concerns that the rise of US-backed stablecoins could trigger a shift of savings from euro to dollar, potentially undermining the EU’s monetary sovereignty and putting European banks at risk of conversion.

The central bank’s document specifically criticizes the provisions of MiCA that allow for a “diverse issuance” structure, where EU-based issuers can collaborate with foreign companies to expand the distribution of stablecoins.

The ECB warns that such frameworks could allow dollar-backed tokens to dominate the EU market, creating a “monopolistic” structure favorable to issuers outside the EU and increasing Europe’s dependence on U.S. public debt.

Current Law Protection Committee

The European Commission strongly rejects the ECB’s viewpoint, asserting in its own document that the central bank has misunderstood MiCA.

According to the report, officials from the Commission argued that the regulation included provisions to mitigate risks posed by foreign-backed stablecoins and emphasized that cryptocurrency companies must meet strict requirements to operate in the EU.

In its rebuttal, the EC stated: “The risks arising from such global stablecoins seem to be exaggerated and can be managed under the current legal framework.”

They point to successful enforcement actions, such as the delisting of Tether (USDT) from several exchanges, as evidence of the effectiveness of regulation.

The Commission also emphasized that only one global stablecoin has been approved under MiCA to date, and that the ECB retains the power to block tokens that threaten the stability of payment systems or monetary policy.

Despite the differences, both organizations agree on the importance of strict enforcement and acknowledge the geopolitical impacts of the U.S. government’s efforts to internationalize the dollar through cryptocurrency innovation.

This tension highlights the broader strategic concern within the EU about its financial independence, as Trump’s crypto-friendly policies gain more attention and the digital dollar continues to be used in unstable economies worldwide.

*Contagion ( refers to the spillover effects in cryptocurrency caused by the failure of one entity impacting other entities.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should conduct thorough research before making decisions. We are not responsible for your investment decisions.

Mr. Teacher