The European Central Bank (ECB) has sounded the alarm over potential risks stemming from U.S. President Donald Trump’s pro-crypto policies, warning that U.S. legislation—particularly around stablecoins—could disrupt financial stability in the EU.
According to the information the ECB is especially concerned about the cross-border implications of forthcoming U.S. crypto regulation, which could weaken the effectiveness of the EU’s current framework under the Markets in Crypto-Assets (MiCA) regulation.
ECB Flags Stablecoin Spillover Threat
According to the ECB, U.S. efforts to promote digital assets—such as legislation that legitimizes and supports stablecoins—could create regulatory loopholes for foreign issuers operating in the European market.
The ECB warns that MiCA, although comprehensive, may fall short in shielding the EU from external shocks, particularly because it allows collaboration between EU-based and third-country stablecoin issuers. This, the bank argues, could expose the European financial system to market volatility originating in the U.S. or other jurisdictions.
“Europe-based stablecoin issuers can pool their resources with issuers in third countries,” the ECB noted in the paper, urging lawmakers to consider revisions that add tougher oversight mechanisms.
Kosta Gushterov
Reporter at Coindoo
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Source: https://coindoo.com/ecb-warns-of-u-s-crypto-policy-risks-urges-stricter-stablecoin-rules-in-europe/