European Union (EU) finance officials are expressing concerns about US President Donald Trump's cryptocurrency policy, saying the move could impact the eurozone's financial stability and monetary sovereignty.

US Crypto Policy Shift

President Trump pledged to be a pro-crypto leader during his election campaign and recently signed an executive order establishing a strategic reserve of Bitcoin and cryptocurrencies. The Trump administration is pursuing a different path from the previous Biden administration's tight regulatory stance, which prioritized controlling cryptocurrencies through law enforcement.

The US push for cryptocurrencies, especially stablecoins pegged to the US dollar, could lead to the rise of mass payment solutions deployed by large technology companies, which could impact the monetary sovereignty and financial stability of the euro area, according to Pierre Gramegna, the managing director of the European Stability Mechanism (ESM). This could have implications for the monetary sovereignty and financial stability of the euro area.

EU concerns

The chairman of the Eurozone Finance Ministers' Group Paschal Donohoe stressed that US policy changes could have major implications for Europe. He stressed that the EU needs to accelerate the development of a digital euro to protect financial sovereignty.

“Policy developments in other jurisdictions could have important implications for us in Europe. These discussions are directly related to the autonomy and resilience of the single currency,” Donohoe said.

The Importance of a Digital Euro

The European Stability Mechanism (ESM) has backed the European Central Bank (ECB) to accelerate the development of a digital euro as a measure to protect the region's strategic autonomy. The ECB has been working on a central bank digital currency (CBDC) since 2020 to facilitate retail payments and cross-border payments between banks.

However, the ECB has stated that it has no plans to include Bitcoin in its monetary reserves. ECB President Christine Lagarde stated that central bank reserves should ensure liquidity, safety and security, while rejecting the possibility of including crypto assets in the EU's official reserve portfolio.

Trump Rejects Central Bank Digital Currencies

While Europe is working on developing CBDCs, President Trump has signed an executive order banning the US Federal Reserve (Fed) from issuing or circulating a central bank digital currency. This is a drastic move to prevent the US from implementing a digital currency similar to the digital euro that the ECB is developing.

These moves show a sharp difference in approach to cryptocurrencies on both sides of the Atlantic, with the US focusing on Bitcoin and stablecoins, while the EU prioritizes the development of CBDCs to protect the traditional financial system.