The United States has been taking a lukewarm approach towards Bitcoin (BTC) and the cryptocurrency sector with Donald Trump as its president.
The support given to cryptocurrencies by the US under the Trump administration has spurred the European Central Bank (ECB) into action.
According to Politico, the ECB warned that Trump and the US’s support for cryptocurrencies could pose financial risks to Europe and called for changes to MiCA rules.
The ECB is concerned that US reforms backed by Trump could flood European markets with dollar-denominated stablecoins, which the ECB fears could lead to a flight of European capital into US assets, undermining the EU’s financial sovereignty and exposing banks to liquidity risks.
While MiCA limits the issuance of foreign-backed stablecoins, the ECB is troubled by two new draft laws – STABLE and GENIUS – that aim to expand the reach of largely dollar-backed stablecoins in the US, and therefore fears that it may not be strong enough to combat the effects of MiCA.
While the ECB is concerned about the economic risks to the European Union, the European Commission has dismissed the warnings as exaggerated and the concerns as being overblown, saying current regulations are sufficient.
This is not investment advice.
