The European Central Bank (ECB) is reportedly pushing to update the EU’s crypto market regulation amid concerns that US President Donald Trump’s stance on digital assets could jeopardize the region’s economy.
According to a policy paper seen by Politico, the central bank believes that Trump’s “lavish support” for the American crypto sector may cause a financial contagion that could blow up the European economy.
Politico reports that European officials worry that several of the major financial market reforms that Trump touted will compromise efforts to revamp the EU’s financial sector.
Of primary concern are the asset-pegged digital asset stablecoins that are mostly denominated in dollars.
Dollar-backed tokens are expected to surge further following a White House executive order to strengthen the crypto sector. US lawmakers are also considering a pair of stablecoin regulatory bills.
While the European Union’s Markets in Crypto Asset Regulation (MiCA) could theoretically prevent foreign currency-backed stablecoins from disrupting the European economy by limiting the issuance of these assets, ECB officials have suggested that the legal framework cannot withstand the effects of America’s turbocharged stablecoin industry.
ECB President Christine Lagarde and the digital payments czar Piero Cipollone say that a surge in dollar-denominated assets into Europe could reroute savings into the US.
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