| Key Points: – Trump’s Crypto Policy supports USD-backed stablecoins, threatening Europe’s monetary autonomy. – The European Stability Mechanism (ESM) urges the acceleration of the digital euro to counter U.S. crypto dominance. – Trump’s administration opposes a Federal Reserve CBDC while expanding crypto-friendly policies. – ECB remains firm against Bitcoin in reserves, emphasizing liquidity and financial stability. |
Trump’s crypto policy, favoring USD stablecoins, raises concerns in Europe, prompting the EU to accelerate digital euro (CBDC) development to maintain financial sovereignty.
The European Central Bank (ECB) has intensified efforts to develop the digital euro in response to U.S. dominance in crypto-backed financial assets. Officials worry that a prolonged delay could weaken the euro’s role in global trade and cross-border settlements.
Trump’s Crypto Policy Sparks Worries Over EU Financial Stability
The European Stability Mechanism (ESM) has raised alarms over Trump’s Crypto Policy, which strongly supports USD-backed stablecoins. According to ESM Managing Director Pierre Gramegna, the growing influence of U.S. stablecoins could undermine Europe’s monetary sovereignty.
Gramegna warns that the U.S. stance may encourage tech giants—both American and foreign—to develop large-scale payment systems based on USD stablecoins, potentially disrupting the financial stability of the Eurozone.
Stablecoins pegged to the U.S. dollar currently have a market capitalization exceeding $224 billion, with monthly trading volumes surpassing $4 trillion.
This growing dominance of dollar-backed assets strengthens the USD’s global financial position while diminishing the euro’s role in digital transactions. The European Central Bank (ECB) now faces increasing pressure to introduce the digital euro to counteract this shift.
Europe Races to Develop a Digital Euro in Response
In response to the challenges posed by Trump’s Crypto Policy, the ECB has accelerated its digital euro initiative. Piero Cipollone, a board member of the ECB, recently emphasized the urgency of launching a digital euro to safeguard European financial autonomy. The ECB plans to unveil a detailed framework for digital euro testing by Q2 2025, with regulatory guidelines expected by Q3.
The urgency was further underscored after Trump signed an executive order in January, prohibiting the creation of a Federal Reserve CBDC while promoting the expansion of USD-backed stablecoins globally. Cipollone and other EU officials fear that these policies could draw European users away from traditional banking systems, increasing reliance on U.S. financial infrastructure.
ECB Rejects Bitcoin as U.S. Expands Crypto Initiatives
Trump’s administration has continued to strengthen its pro-crypto stance, recently issuing a second executive order establishing a Strategic Bitcoin Reserve for the U.S. Treasury. The reserve will be built from confiscated Bitcoin and potentially expanded through government purchases, though without using taxpayer funds.
In contrast, the ECB remains firmly against integrating Bitcoin into its monetary reserves. ECB President Christine Lagarde has reiterated that central bank reserves must remain “liquid, secure, and stable,” explicitly rejecting Bitcoin due to its association with illicit finance and market volatility. The ECB had previously argued that Bitcoin exacerbates wealth inequality and poses systemic risks to financial stability.
As the U.S. accelerates its crypto expansion under Trump’s Crypto Policy, Europe is now in a race to establish its own digital financial framework. Whether the digital euro can successfully counterbalance the rising influence of USD-backed stablecoins remains a critical question for the future of European finance.
| DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing. |
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