- ECB warns US stablecoins threaten European financial sovereignty.
- EU resists revising MiCA regulations despite ECB concerns.
In a deepening policy divide within the European Union, the European Central Bank (ECB) has issued a strong warning over US dollar-backed stablecoins. These digital assets concern the ECB about European financial independence. The European Central Bank needs immediate revisions to the Markets in Crypto-Assets (MiCA) regulation.
ECB Warns US Crypto Growth Could Disrupt European Financial Systems
The ECB’s concerns stem primarily from the increasing momentum of the American crypto industry, under the potential influence of President Donald Trump. Market analysts predict that dollar-backed stablecoins will grow extensively throughout the next decade as their value projection will rise beyond two trillion US dollars from the current 240 billion.
Based on ECB analysis, such profound market expansion would drive significant flows of American-affiliated assets into European financial sectors. The incoming financial resources threaten monetary sovereignty because they reduce the role of the euro currency as well as redirect funding from European markets.
The main subject of this dispute involves stablecoin regulation since stablecoins function as digital currencies that maintain value stability when tethered to traditional currencies such as the US dollar. The ECB notes that increased use of these assets presents a risk to the monetary control power that national and regional authorities hold.
The ECB notes in its internal assessment that MiCA maintains innovative characteristics that allow dangerous multi-issuance models with external entities outside the EU. The bank states that these arrangements create potential exposure for EU financial institutions to face unforeseen financial disruptions from outside sources.
Such concerns remain unfounded in the mind of the European Commission. The Commission asserts through its policy paper that the existing framework in MiCA offers sufficient safeguards because existing legal instruments are effective for handling potential threats from international stablecoins. The Commission claims that the ECB misinterprets the regulatory goals because the bank fails to understand the limits of EU issuers’ obligation to issue and redeem stablecoins within the European Union.
EU Finance Officials Show Resistance to Revising Mica Regulations
In recent discussions among EU finance officials, the Commission received wider backing for its specific position. Some European Union member states preferred to let existing rules be implemented while showing resistance to new regulations at this point. A senior diplomat from the EU expressed the weak governmental interest in revising a regulation just months after its adoption took effect.
Meanwhile, ECB President Christine Lagarde, together with Executive Board Member Piero Cipollone, insists on stronger regulatory measures. Current statements from officials reveal an institutional belief that MiCA lacks sufficient power to mitigate expanding global stablecoin market risks. ECB officials warn about potential dangers in rising EU investments in U.S. debt instruments because it would increase EU dependence on external financing.
In parallel, the ECB might maintain its opposition against stablecoins because it seeks to launch its digital euro project. The introduction of this initiative marks a strategic approach against crypto asset growth while enabling Eurozone countries to maintain financial control in the increasingly digital global marketplace.
Lastly, the dispute between the ECB and the Commission shows the difficulty of achieving innovation alongside effective regulations. The European Union will face an essential examination of its regulatory infrastructure between defending its monetary interests as transnational crypto operations adapt.
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