EU Regulators Divided on Stablecoin Risk Amid US Crypto Expansion

EU regulators are split on the risks associated with stablecoins as the US moves to expand its influence in the crypto space. The European Central Bank (ECB) has expressed concern that the current market in Crypto Assets (MiCA) regulations are inadequate to address the risks posed by US dollar-pegged stablecoins. Despite passing MiCA in 2023 and it becoming fully effective in December 2024, the ECB believes it must be amended to counter the potential impact of crypto industry deregulation under the Trump administration. ECB officials fear that US pro-crypto policies could lead to asset flight from Europe to the US, posing risks to financial stability and liquidity for European banks. These concerns underscore the ongoing debate surrounding the regulation of stablecoins and the broader crypto market.