The European Central Bank warns that the United States' push for crypto policy could pose a risk of financial contagion

The European Central Bank (ECB) has warned of the possible consequences of aggressive US support for the cryptocurrency industry, saying a surge in dollar stablecoins could destabilise the European financial system. The ECB requested changes to the regulatory framework of the Crypto Asset Markets Regulation (MiCA) just months after it came into force, according to a policy paper obtained by POLITICO. At the heart of the controversy is the possibility that US reforms backed by President Trump could flood European markets with dollar-denominated stablecoins. The ECB is concerned that this could trigger a flow of European capital to US assets, weaken the European Union's financial sovereignty and expose banks to liquidity risks. Without tighter restrictions, European issuers could face redemption pressure from the European Union and foreign holders, potentially triggering a financial "run" and damaging institutions, the ECB has warned.