European Central Bank wary of US stablecoin influence despite EUs MiCA safeguards
The European Central Bank (ECB) has reportedly raised alarms over the possible consequences of US President Donald Trumps crypto-friendly stance, Politico reported on April 22, citing a policy paper.
According to the report, the ECB highlighted the potential ripple effects of US stablecoin legislation as a key risk factor that could expose the bloc to market instability.
While the EUs Markets in Crypto-Assets (MiCA) regulation has introduced stricter oversight, the central bank believes it may not be strong enough to withstand spillovers from major US policy shifts.
They argued that the regulation could leave the European financial ecosystem vulnerable because the law allowed Europe-based stablecoin issuers [to] pool their resources with issuers in third countries.
Due to this, the ECB urged EU lawmakers to revise MiCA and introduce tougher regulatory safeguards, particularly around stablecoin issuance and cross-border asset flows.
However, not everyone agrees. The European Commission resisted the ECBs warnings, suggesting that the central bank may have misunderstood the current legal framework.
According to Politico, the Commission maintains that existing laws provide sufficient control over digital asset risks within the EU.
MiCA has already imposed strict requirements on stablecoin issuers. As a result, only 11 firms, including Circle, the issuer of USDC, have met the stringent compliance standards.
Notably, Tether, which issues the worlds largest stablecoin USDT, has failed to comply with MiCA guidelines. This has prompted several European exchanges to delist USDT in recent months.
Global concerns linger
Despite the Commissions confidence, global watchdogs remain cautious about the dominance of US-backed stablecoins..
These digital assets are primarily collateralized by American treasury assets and dominate the $240 billion stablecoin market.
Many analysts argue that if US lawmakers greenlight a comprehensive regulatory framework, it could give Washington an outsized influence over digital finance.
This dominance has sparked warnings from global economic players. Chinese economist Zhang Ming recently echoed the ECBs concerns. He warned that US dominance in the stablecoin sector could extend Americas control over global financial systems.
As a result, Zhang urged Chinese policymakers to ramp up efforts to internationalize the digital yuan.
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Text source: CryptoSlate
