It seems the European Central Bank (ECB) is getting worried about what could happen if US President Donald Trump pushes a crypto-friendly agenda, according to a report from Politico on April 22 that cited a policy paper.

The report indicated that the ECB specifically highlighted the potential ripple effects of US stablecoin legislation as a key risk factor, suggesting it could expose the EU bloc to market instability.

Even though the EU’s Markets in Crypto-Assets (MiCA) regulation has brought in stricter oversight, the central bank reportedly feels it might not be robust enough to withstand spillovers resulting from significant US policy changes.

Their argument is that the current regulation could leave the European financial system exposed because the rules allow “Europe-based stablecoin issuers [to] pool their resources with issuers in third countries.”

Because of this concern, the ECB reportedly urged EU lawmakers to revisit MiCA and put in place stronger regulatory safeguards, particularly when it comes to issuing stablecoins and managing assets flowing across borders.

However, not everyone is on the same page. The European Commission, for instance, reportedly pushed back against the ECB’s warnings, suggesting the central bank might have misunderstood the existing legal setup.

According to Politico, the Commission insists that the laws currently in place already provide adequate control over digital asset risks within the EU.

MiCA has already put strict demands on companies issuing stablecoins. As a result, only 11 firms, including Circle, the company behind USDC, have managed to meet these tough compliance standards.

Notably, Tether, which issues the world’s largest stablecoin USDT, hasn’t met the MiCA guidelines. This situation has led several European exchanges to stop listing USDT in recent months.

Concerns stretch beyond Europe

Despite the Commission’s confidence, global financial watchdogs still feel uneasy about how dominant US-backed stablecoins are.

These digital assets mostly rely on American treasury assets for collateral and make up the majority of the $240 billion stablecoin market.

Many analysts point out that if US lawmakers decide to approve a comprehensive regulatory framework, it could give Washington a disproportionate amount of influence over the world of digital finance.

This kind of dominance has already triggered warnings from significant global economic figures. Chinese economist Zhang Ming recently echoed the ECB’s worries, cautioning that US control in the stablecoin sector could effectively expand America’s grip on global financial systems.

Consequently, Zhang urged Chinese policymakers to step up their efforts to make the digital yuan more widely used internationally.