ECB “Dollar stablecoin proliferation, Threatening European financial sovereignty”...Request for Mika revision

The European Central Bank (ECB) expressed concerns about the potential disruption to European financial markets due to the expansion of the United States cryptocurrency industry and has called for a prompt amendment to the European Union (EU) MiCA regulation, a unified regulatory proposal for cryptocurrencies. Especially, the ECB warned that an excessive influx of stablecoins linked to the U.S. Dollar into the European market could undermine the EU's financial sovereignty.

According to a policy report obtained by Politico on the 22nd (local time), the ECB pointed out that the recently enforced MiCA is insufficient to reflect the current global trend. As the U.S., led by President Trump, fully embraces the cryptocurrency industry, the possibility of the spread of Dollar-based stablecoins in Europe has increased. The ECB is concerned that this could lead to European funds moving to U.S. assets and European banks being exposed to liquidity risks.

The ECB is particularly demanding the strengthening of conditions for stablecoin issuers. Stablecoins circulating within Europe should be supplied only by issuers registered within the EU, according to regulations that need to be amended. Even though MiCA has been in force since July last year, the ECB considers this framework insufficient to respond to changes in U.S. policy.

However, the European Commission drew a line against the ECB's claims. According to multiple diplomats and EU officials, the Commission believes MiCA already has a sufficiently strong framework, and there is no need to rush to amend the law solely due to changes in U.S. policy. One official stated, “Only a few countries agree with the ECB's concern,” implying a strong flow of opposition to hasty amendments.

This difference in perspective between the ECB and the Commission is expected to influence the future push for a Central Bank Digital Currency (CBDC), the Digital Euro. Previously, the EU officially announced the development of the Digital Euro last October.

Some in the market criticize that while Europe took a leading position by being the first to establish a cryptocurrency regulatory framework, MiCA's excessive restrictions have undermined global competitiveness. Tradingstrategy’s co-founder Mikko Ohtamaa claimed, “The EU seized the initiative in regulation but blew the opportunity,” attributing the lack of competitiveness of stablecoins within the EU in the global market to existing financial sector lobbying.

Policy analyst Nicholas Anthony also criticized, “The ECB is fostering baseless fears to justify the introduction of the Digital Euro,” and added, “While the U.S. shows a forward-looking attitude towards cryptocurrencies, Europe is moving in a direction that restrains innovation.”