The European Central Bank has raised alarm over President Donald Trump’s pro-crypto agenda, warning that a wave of dollar-backed stablecoins could threaten financial stability across the eurozone and overwhelm the EU’s new crypto regulatory framework.

In a confidential policy paper obtained by Politico, the ECB urged the European Commission to revisit the Markets in Crypto Assets Regulation (MiCA), expressing concerns that the current rules may be too lenient to counteract the effects of aggressive US crypto reforms.

The reforms include two proposed laws, the STABLE and GENIUS acts, which analysts at Standard Chartered forecast could push dollar-backed stablecoin supply to $2 trillion by 2028, up from around $240 billion currently.

Fears of “contagion”

MiCA, which took effect earlier this year, was heralded as the world’s first comprehensive crypto regulation. However, the ECB now argues that it may be insufficient to protect the EU from the spillover of a rapidly expanding US stablecoin sector.

ECB President Christine Lagarde and digital payments chief Piero Cipollone have both voiced concerns that the rise of US-backed stablecoins could trigger a shift in savings from euros to dollars, potentially undermining EU monetary sovereignty and exposing European banks to redemption risks.

The central bank’s paper specifically criticized MiCA’s allowances for “multi-issuance” structures, where EU-based issuers can partner with foreign firms to expand stablecoin distribution.

It warned that such frameworks could enable dollar-backed tokens to dominate EU markets, creating what it described as an “oligopolistic” structure favoring non-EU issuers and increasing European exposure to US Treasury debt.

Commission defends existing law

The European Commission strongly disputed the ECB’s stance, asserting in its own paper that the central bank had misinterpreted MiCA.

According to the report, Commission officials argued that the regulation already includes provisions to mitigate the risks posed by foreign-backed stablecoins and emphasized that crypto firms must meet strict requirements to operate within the EU.

The EC said in its rebuttal:

“The risks arising from such global stablecoins seem to be overstated and are manageable under the existing legal framework.”

It pointed to successful enforcement actions, such as Tether’s (USDT) delisting from some exchanges, as proof of the regulation’s effectiveness.

The Commission also highlighted that only one global stablecoin had been approved under MiCA so far, and that the ECB retains the authority to block tokens that threaten the stability of payment systems or monetary policy.

Despite the disagreement, both institutions agree on the importance of rigorous enforcement and acknowledge the geopolitical implications of the US administration’s efforts to internationalize the dollar through crypto innovation.

The tension highlights the broader strategic anxiety within the EU over its financial independence, as Trump’s crypto-friendly policies gain traction and digital dollars continue to find use in unstable economies abroad.

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