ECB Warns of Trump’s Crypto Policies and Growing U.S. Power

The European Central Bank (ECB) has raised concerns about the possible impact of U.S. President Donald Trump’s support for cryptocurrencies. In a new policy paper reported by Politico on April 22, the ECB warned that U.S. actions, especially around stablecoins, could create financial risks for Europe.

ECB Sees Risk in U.S. Stablecoin Policies

The ECB believes new U.S. laws supporting stablecoins could affect Europe’s financial markets. Stablecoins are digital currencies backed by real-world assets, like the U.S. dollar. They are widely used in global crypto trading.

Although the EU’s Markets in Crypto-Assets (MiCA) law has introduced stronger rules, the ECB says they may not be enough. The central bank is especially worried about how European stablecoin issuers can work with partners outside the EU, which the ECB said could bring outside risks into Europe’s financial system.

ECB Pushes for Stricter Crypto Rules, Commission Disagrees

 The ECB urges EU lawmakers to make MiCA tougher to reduce these potential risks. The financial bank wants more control over how stablecoins are created and stronger rules on money moving between countries. The goal is to protect Europe’s financial system from changes in U.S. crypto policies.

However, the European Commission does not fully agree with the ECB’s warning. The commission said the ECB may have misunderstood how MiCA works. According to the Commission, the law already provides strong control over crypto risks within the EU.

MiCA rules have made it harder for companies to issue stablecoins in Europe. The commission explained that only 11 crypto firms have been able to pass its strict rules, and one of them is Circle, the company behind the U.S. stablecoin USDC.

On the other hand, Tether, the largest stablecoin issuer, has not met MiCA’s standard, and some European exchanges have stopped listing its USDT stablecoin.

Wider Concerns About U.S. Control

Most stablecoins are backed by U.S. dollars and American government bonds, giving the country a lot of control over the $240 billion stablecoin market. If the U.S. creates a full set of crypto rules, it could increase its influence over global digital finance.

Other countries are also concerned. Chinese economist Zhang Ming recently warned that U.S. dominance in the stablecoin market could increase America’s power in global finance. He urged China to expand the use of its digital currency, the digital yuan.