The European Central Bank Warns Against Trump's Endorsement of Crypto

The European Central Bank (ECB) has issued a stark warning that U.S. President Donald Trump's strong support for the American cryptocurrency sector may not be very pleasant for the European financial systems.

The ECB fears that Trump's policies, including the promotion of dollar-backed stablecoins and a Strategic Bitcoin Reserve, may cause financial contagion that could disrupt the European financial system.

The ECB is particularly concerned that the current EU crypto regulations, notably the Markets in Crypto-Assets Regulation (MiCA), are insufficient to handle the risks posed by the rapid expansion of U.S.-style multi-issuer stablecoins and crypto assets.

This warning has led to a conflict between the ECB and the European Commission. The Commission has dismissed the ECB's alarmist stance, arguing that the ECB misunderstood the EU's regulatory framework and that its intervention in lawmaking is unwelcome.

French Central Bank Governor Francois Villeroy de Galhau, a key ECB member, echoed these concerns, warning that Trump's crypto policies could spark global financial instability.

He highlighted that the U.S. government's crypto-friendly initiatives, such as cutting capital gains taxes on crypto and supporting crypto mining, contrast sharply with Europe's more cautious regulatory approach.

De Galhau urged Europe to strengthen its financial framework and assert the euro's global role in response to the U.S. stance.

The ECB warns that Trump's pro-crypto policies risk causing major disruptions in Europe's financial system due to insufficient regulatory safeguards, while the European Commission disputes the severity of these warnings. This tension reflects broader transatlantic differences in crypto regulation and financial policy.

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