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Why the ECB Thinks US Crypto Could Wreck Europe’s Financial Picnic

BBG News

Ah, the European Central Bank (ECB), ever vigilant, has raised an eyebrow—or maybe two—over the potential financial chaos being stirred up by the United States’ wild love affair with crypto. The warning bell rings as Europe’s financial stability is threatened by a tidal wave of dollar-backed stablecoins. Because, of course, that’s exactly what the financial world needs right now, right?

In a *must-read* policy paper that has found its way to the ever-discerning eyes of POLITICO, the ECB is frantically waving its hands in the air, shouting that the regulatory framework governing cryptocurrencies (you know, the one that was introduced just a few months ago) needs an urgent makeover. You’ve got to love the timing—just as the ink has dried, they’re already calling for rewrites. Nice job, MiCA.

So, what’s the issue here? It turns out that the United States, under the bold leadership of President Donald Trump (because why not?), is pushing a *glorious* plan to flood Europe with stablecoins denominated in the almighty dollar. Yes, those shiny, stable digital coins that are totally *stable*—until they’re not. The ECB is having a slight panic attack because these dollar-based tokens could send European capital running across the Atlantic like it’s on fire, thus throwing a wrench in Europe’s financial sovereignty. Europe’s banks, already struggling with liquidity issues, could get knocked out by this tidal wave. How delightful!

MiCA: Europe’s Most *Debated* Regulation

But, of course, the European Commission has entered the scene like the calm, wise voice of reason—telling the ECB to just breathe and chill. According to sources from the Commission, these concerns are being blown out of proportion. Why? Because the MiCA framework is already as strong as a knight’s armor, despite the US concocting policies like the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act and the *oh-so-creatively named* GENIUS Act. These US acts are, naturally, aimed at making crypto *bigger* and *better* in the US. Maybe too big and too good? Who’s to say?

One of the diplomats—who I assume speaks for all of Europe now—told POLITICO, “The Commission was quite clear that they had different views on this topic,” and in an unexpected plot twist, “not very many (countries) supported the idea that we should now jump the gun and start making quick changes.” Oh, diplomacy. Never change.

Meanwhile, the stablecoin sector has reached an eyebrow-raising $234.151 billion. That’s a whole lot of digital coinage circulating around the globe. And if you’re wondering, yes, the ECB is still worrying about the inevitable stampede of redemptions from EU and foreign holders, which could lead to a financial “run” on the banks. Because who doesn’t love a good old-fashioned financial panic?

Enter Mikko Ohtamaa, co-founder and CEO of Trading Strategy, who took to X (formerly Twitter) to add some fuel to the fire. “The worry is warranted,” he quipped. “However, the EU had the first mover advantage with the regulation, and they screwed it up.” Nice. That’s a mic drop if I ever saw one. His opinion? The EU’s MiCA rules are too restrictive, thanks to a few *legacy* financial institutions throwing their weight around.

Financial chaos illustration

Tether: Still Not a Fan of MiCA

Of course, Tether, the issuer of the world’s biggest stablecoin, USDT, is still not on board with MiCA. No surprises there. CEO Paolo Ardoino has been *voicing his concerns* (read: ranting) for years about how MiCA could cause chaos, particularly with its rule that stablecoin issuers must park at least 60% of reserves in EU bank accounts. Tether fears this could create all kinds of *systemic risks*, which, as we all know, is the kind of thing that makes financial institutions break out in a cold sweat.

In true Tether style, USDT has faced a string of delistings from major European exchanges like Coinbase, Crypto.com, and Kraken. Because nothing says “we’re not happy” like being kicked off major platforms. Ouch.

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2025-04-22 13:02

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