The European Central Bank says U.S. President Donald Trump’s pro-crypto stance could trigger instability without stronger European safeguards.
The European Central Bank and the European Commission are locked in a dispute over whether the European Union‘s new crypto rules can withstand financial risks linked to Donald Trump‘s return.
According to a policy paper seen by POLITICO, the ECB warned that Trump’s support for the U.S. crypto industry could trigger financial “contagion” and said the Markets in Crypto Assets regulation needs urgent changes. Per the central bank, the regulation is too soft on the “multi-issuance” model, where European and non-European stablecoin issuers work together.
ECB boss Christine Lagarde pointed out that MiCA would have to change, and implied that the unique threat posed by stablecoins was “understood” by the Commission and other institutions in the European Union.
Still, the Commission strongly pushed back, as in its own paper seen by POLITICO it said that the risks arising from such global stablecoins “seem to be overstated and are manageable under the existing legal framework.”
One EU official told POLITICO the ECB’s concerns were based on a “fundamental misreading” of MiCA and added that the idea of a traditional run on an asset backed one-to-one was “nonsense.” The official also accused the ECB of “hyping the stablecoin menace” to win support for its digital euro project, which is expected to be launched by October.
The ECB fears a surge in dollar-backed stablecoins — which already dominate the market — could pull European capital into U.S. debt and hurt the European Union’s financial independence. It also warned European issuers might be forced to redeem both European and foreign tokens, risking a “run” on reserves.
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