The European financial establishment is entering open conflict with itself as anxiety mounts over a potential surge in stablecoins and American crypto influence, fuelled by US President Donald Trump’s renewed embrace of digital assets.
Why Trump is rattling the EU
At the centre of this growing storm is a transatlantic regulatory divergence that European Central Bank (ECB) officials fear could spiral into financial contagion.
According to documents seen by POLITICO, the ECB is urging an immediate revision to the EU’s landmark Markets in Crypto-Assets Regulation (MiCA) — a sweeping framework only enacted in 2023 and celebrated as the first globally comprehensive regime for crypto oversight.
The catalyst?
Fears that Trump’s deregulation drive and stablecoin advocacy could undermine European monetary sovereignty and financial stability.
Yet the European Commission, which drafted MiCA, is dismissing these concerns as overblown.
In a rare public disagreement, Brussels is accusing the ECB of misinterpreting the very framework it helped shape — a standoff that underscores wider unease about Europe’s vulnerability in a rapidly digitising global financial landscape.
Transatlantic Tensions and the Dollar’s Digital Reinforcement
The ECB’s concern centres on the expanding dominance of dollar-denominated stablecoins — digital currencies designed to maintain a fixed value against fiat money.
Most of these are pegged to the US dollar and backed by assets like US Treasury bills. They have found favour not only as trading instruments but as unofficial alternatives to unstable local currencies in parts of the developing world.
In this context, the ECB argues, a turbocharged American stablecoin market — enabled by two upcoming US legislative proposals dubbed STABLE and GENIUS — could reroute European capital flows into dollar-based systems.
One estimate by Standard Chartered predicts that dollar-backed token supply could reach $2 trillion by 2028, up from $240 billion today.
Such an influx, the ECB warns, would compromise the EU’s strategic autonomy by drawing European savings into US debt markets, raising systemic risk.
Officials fear that in times of stress, redemptions on both sides of the Atlantic could drain liquidity from European institutions — especially if local issuers engage in so-called “multi-issuance” models in collaboration with US partners.
ECB President Christine Lagarde has called for MiCA to be urgently revisited to guard against these risks.
Her position is backed by Piero Cipollone, the bank’s digital payments lead, who has consistently warned about the disruptive potential of global stablecoins.
Brussels Bites Back: No Appetite for Panic
But the European Commission sees things differently.
In its own analysis, it argues that MiCA already contains sufficient guardrails to manage the crypto influx — from strict authorisation processes and redemption limits to provisions empowering the ECB to block stablecoin issuers deemed a threat.
Brussels suggests the ECB is overstating the risks, perhaps in service of its own digital euro agenda, which has struggled to gain political momentum.
“The risks arising from such global stablecoins seem to be overstated and are manageable,” the Commission said in its rebuttal.
While acknowledging that only one global stablecoin has been authorised under MiCA to date, the Commission notes that enforcement — not rewriting the law — is the real issue.
Some major issuers, such as Tether, have already been delisted from European exchanges under the new rules.
Furthermore, the Commission dismissed the idea that European issuers could be caught in a liquidity trap triggered by US redemptions.
“It makes no economic sense,” said one official, arguing that legal and financial structures in MiCA were expressly designed to prevent such spill overs.
A Battle Over Sovereignty — And Strategy
The clash speaks to a deeper anxiety about Europe’s place in an evolving financial world order.
The Trump administration’s use of crypto to reinforce dollar hegemony is interpreted in Brussels and Frankfurt alike as a strategic manoeuvre — one that risks locking the EU into a reactive posture unless it asserts regulatory leadership.
Whether MiCA proves resilient or revision-worthy, one thing is clear: as stablecoins scale and the digital dollar advances, the EU’s financial policymakers will have little choice but to navigate between regulatory integrity and geopolitical pragmatism.
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