The European Central Bank and the European Commission are in a standoff over the resilience of the EU’s new cryptocurrency regulations, questioning whether they can hold up against financial volatility that could arise if Donald Trump returns to the U.S. presidency.
According to a policy paper obtained by POLITICO, the European Central Bank has raised concerns that Donald Trump’s pro-crypto stance could spark financial “contagion” if he returns to office. The ECB urges immediate revisions to the EU’s Markets in Crypto-Assets (MiCA) regulation, arguing it is too lenient—particularly toward the “multi-issuance” model, where stablecoin issuers inside and outside Europe collaborate.
ECB President Christine Lagarde emphasized the need to revise the MiCA framework, suggesting that EU institutions, including the Commission, now recognize the distinct risks stablecoins pose. She indicated that the evolving threat landscape demands a more robust regulatory response.
However, the European Commission firmly disagreed, arguing that the risks posed by global stablecoins are often exaggerated and can be effectively managed within the current legal framework.
An EU official told POLITICO that the ECB’s concerns stemmed from a “fundamental misreading” of MiCA, dismissing the notion of a traditional run on an asset-backed one-to-one as “nonsense.” The official further accused the ECB of exaggerating the stablecoin threat to garner support for its upcoming digital euro project, slated for launch by October.
The ECB is concerned that a rise in dollar-backed stablecoins, which already dominate the market, could lead to European capital flowing into U.S. debt, undermining the EU’s financial independence. Additionally, the central bank warned that European issuers might be compelled to redeem local and foreign tokens, potentially triggering a “run” on reserves.
The ECB and the European Commission share concerns that a potential return of Donald Trump to power could escalate financial risks. Notably, the U.S. Dollar Index (DXY) has fallen to 102.96, driven by renewed trade tensions under Trump’s leadership, creating uncertainty in global markets.
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