ECB Warns of ‘Financial Contagion’ Risk from US Crypto Policies, Reports Politico

ECB fears that US President Donald Trump’s support for the crypto industry could trigger ‘financial contagion’ and harm Europe’s economy. This is reported by Politico citing an internal document from the regulator.

The bank is concerned about the potential strengthening of dollar-backed stablecoins. According to the ECB, the existing MiCA regulations in the EU may not be stringent enough to adequately protect the region’s economy.

The European Commission has questioned the ECB’s conclusions, suggesting a possible overestimation of risks. According to Politico, an EU official believes that such statements by the regulator are being used to promote the digital euro.

The ECB also fears that the adoption of the STABLE Act and GENIUS Act could increase capital outflows to the US, and European issuers may face the threat of mass redemption requests for stablecoins, risking ‘runs’ on their reserves.

Back in March 16, ECB Governing Council member François Villeroy de Galhau stated that US policies on cryptocurrencies and non-bank financing could lead to a new financial catastrophe.