From meme coins to strategic Bitcoin reserves, America’s outlook toward crypto has done a complete 180 in just two months.
And across the pond, that’s making regulators in the European Union exceedingly nervous.
While the trading bloc has no interest in dabbling in U.S. affairs — or displeasing Donald Trump as he threatens to impose eye-watering tariffs, including a 200% levy on French champagne — there are concerns that his administration’s pro-crypto approach will have ripple effects worldwide.
At a recent news conference, the European Stability Mechanism raised concerns about one policy area in particular: stablecoins.
The Guiding and Establishing National Innovation for U.S. Stablecoins Act — otherwise known as GENIUS for short — recently made its way out of the Senate Banking Committee with a healthy majority.
This could potentially open the door to the proliferation of new digital assets pegged to the dollar, with some issued by private institutions. As ESM head Pierre Gramegna told reporters at a recent news conference:
“The U.S. administration is favorable towards cryptocurrencies and especially dollar-denominated stablecoins, which may raise certain concerns in Europe that it could reignite foreign and U.S. tech giants’ plans to launch mass payment solutions based on dollar-denominated stablecoins.”
Make no mistake: this is a thinly veiled reference to Libra — no, not the meme coin promoted by Javier Milei on X, but the doomed project attempted by Facebook back in 2019. At the time, there were huge concerns that this digital asset would give a private company vast control over the payment landscape, potentially jeopardizing the global economy should things go wrong.
But there’s a bigger consideration here: if some of America’s biggest brands start offering their own stablecoins to the masses, is there a risk that this could dampen demand for the euro? Eurogroup President Paschal Donohoe warned:
“Policy developments in other jurisdictions can have important consequences for us here in Europe. These discussions are fundamentally linked to our own autonomy and to the resilience of our currency.”
The EU believes that the silver bullet to this problem is the digital euro — its very own central bank digital currency. Officials stress it wouldn’t replace cash, and would offer a free and fast payment method that’s fit for the future.
Unfortunately, even research from the European Central Bank suggests that consumers don’t see it this way. The number of households interested in trying out this CBDC has remained static, despite a marked increase in awareness thanks to press coverage.
An experiment was carried out where a group of consumers was shown an educational video about the digital euro. Most of those who were asked if they would like to see more information for free declined — and any uptick in those prepared to adopt it evaporated after three months.
There’s been widespread suspicion and no shortage of conspiracy theories surrounding CBDCs in general, with critics making unfounded claims that it could be used to spy on the public and curtail their purchases — from limiting the number of flights they take a year, to blocking alcohol purchases in the early hours of the morning.
All of this contributed to Donald Trump vowing that he would never allow a U.S. CBDC to be created during his presidential term — a moot point considering that it wasn’t a priority for the Federal Reserve anyway. Several states have also been lobbying to ban a hypothetical digital dollar from ever being used.
What’s more, the EU hasn’t actually officially confirmed whether it plans to give a digital euro the green light yet. A final decision on proceeding to the next phase is only due to be made in October. Given how enthusiasm for a retail-focused digital asset has cooled in both Australia and Canada, this is far from a done deal. If it is approved, this CBDC might not end up being used by consumers until 2028 at the earliest.
You can bet your bottom dollar that American financial institutions will have launched their own stablecoins by then — and may even be looking to expand overseas to gobble up market share in Europe. That’s when life could get really hard for the trading bloc. Not only might it have to face an angry Trump, but EU customers may also be exasperated at any regulatory attempt to block them being used.
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