EU officials warn stablecoins may threaten the euro’s dominance.
EU Officials Concerned Over U.S. Crypto Policies
European leaders are voicing concerns over President Donald Trump’s pro-crypto stance, warning that it could disrupt the eurozone’s financial stability. Pierre Gramegna, managing director of the European Stability Mechanism, cautioned that the rise of dollar-backed stablecoins could undermine the euro’s dominance. He urged the European Central Bank (ECB) to accelerate plans for a digital euro to counterbalance U.S. crypto policies.
Stablecoins Pose a Challenge to the Euro
Gramegna warned that Trump’s policies could revive efforts by U.S. tech giants to launch global payment systems based on dollar-backed stablecoins. “If this were to be successful, it could affect the euro area’s monetary sovereignty and financial stability,” he stated. European officials fear that increased reliance on U.S. stablecoins could weaken the euro’s role in global transactions, shifting economic influence toward the U.S.
Trump’s Actions Fuel European Anxiety
Since taking office, Trump has pardoned Silk Road founder Ross Ulbricht, appointed pro-crypto regulators, and vowed to reverse Biden-era restrictions on digital assets. His January 23 executive order banned U.S. agencies from creating a central bank digital currency (CBDC), directly opposing the EU’s push for a digital euro. European policymakers worry that this divergence in crypto policy could disrupt financial systems.
Lessons from the Libra Controversy
European officials compare the situation to Facebook’s Libra project, which was rebranded as Diem before ultimately being abandoned due to regulatory pushback. The EU initially opposed Libra over fears it would bypass traditional banking systems and weaken monetary control. Now, they see stablecoins as a similar threat, arguing that unregulated private currencies could erode financial oversight.
Eurozone Leaders Push for a Digital Euro
In response, Eurogroup Chairman Paschal Donohoe emphasized the importance of launching a digital euro to maintain the region’s economic resilience. “The digital euro is critical to staying ahead of the curve in this area,” he stated. EU officials argue that without a state-backed alternative, stablecoins could dominate European payments, diminishing the euro’s role in global finance.
Divided Global Approaches to Digital Assets
While Europe is doubling down on CBDCs, the U.S. is taking a different route by favoring stablecoin innovation over central bank-issued digital money. Erwin Voloder, head of policy at the European Blockchain Association, warned that this policy divide could put the EU at a disadvantage. European regulators now face a crucial decision: whether to compete with stablecoins through innovation or impose stricter controls to limit their influence.
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