The European Central Bank (ECB) has raised concerns about the economic risks posed by Trump’s crypto push. The central bank warns that the pro-crypto stance may negatively affect the Eurozone economy. This comes amid rising worries over stablecoin dominance and the role of the dollar in digital asset markets. Meanwhile, the European Commission claims that existing rules under MiCA provide enough safeguards to prevent market disruption.

ECB Flags Risk to Eurozone from U.S. Crypto Expansion

According to a recent Politico report, the ECB has questioned the readiness of the Markets in Crypto-Assets (MiCA) regulation to handle external crypto-related stress. The bank claims that Trump’s favorable view of crypto, especially dollar-backed stablecoins, could lead to financial spillover into the Eurozone.

The European Central Bank believes this could damage the region’s monetary sovereignty. The central bank has raised concerns that the expansion of USD stablecoins could challenge the euro’s position in the digital financial system. It fears that without stronger legislative adjustments, MiCA may not be enough to shield the market from future volatility linked to foreign crypto assets.

European Commission Dismisses Concerns Raised by ECB

The European Commission reacted with statements that diminish the ECB’s statements. The MiCA framework which the Commission approved during 2023 includes sufficient controls for stablecoins tied to external currencies. The Commission states that existing legislation blocks the excessive circulation of stablecoins that do not use the euro currency in the European Union.

Officials have stated that the rules limit large-scale adoption of USD stablecoins. The Commission also indicated that all crypto service providers operating in the EU will be required to comply with strict licensing and operational standards.

Stablecoin Debate Sparks Internal EU Tensions

The disagreement between the ECB and the Commission intensified during a meeting of top EU officials on April 14. The meeting focused on potential risks that U.S. crypto expansion may pose to Europe’s economic structure. The European Central Bank called for stricter regulation, citing the increasing reliance on dollar-denominated digital assets.

In contrast, the Commission and most EU member states dismissed the concerns. The Commission expressed its opposition to this amendment because MiCA already has provisions for foreign digital assets while including thorough risk management measures. The ECB pushes for expanded governance while the Commission advocates that authorities should execute current rules properly.

Digital Euro and Future Crypto Regulation in Europe

The European Central Bank pursues actively the creation of a digital euro to provide a fixed alternative to privately-issued digital money. The central bank argues that this initiative serves as a response to growing American-backed stablecoin power in the area.

It was previously reported that the ECB plans to enhance the use of digital euros for cross-border transactions. It continues to call for improvements in regulatory frameworks to support long-term digital finance innovation. Whether further policy changes will follow remains to be seen, but discussions are likely to continue within EU bodies.