The conflicting stances between Europe and the US on a range of issues has become clear as day in recent weeks, and this divergence also extends to technology with cryptocurrency another facet of the Atlantic divide.
European Central Bank (ECB) Governing Council Member, Francois Villeroy de Galhau, recently spoke to French news outlet La Tribune Dimanche warning that US President Donald Trump’s pro-crypto stance may cause “future upheavals” to the global economy and banking industry.
As Villeroy stated that “the United States risks shining through negligence” when it comes to the Trump administration’s crypto executive orders, he noted that this could cause future ramifications for the European Union (EU), the ECB and global financial stability.
He said: “Financial crises often originate in the United States and spread to the rest of the world. By encouraging crypto-assets and non-bank finance, the American administration is sowing the seeds of future upheavals.”
Trump is currently making good on his pre-election campaign promises of making the US the global leader in crypto.
The US President signed an executive order on 6 March to create a strategic Bitcoin reserve, viewing the world’s largest cryptocurrency as ‘digital gold’ and something that should be preserved as an alternative financial asset for the future.
Taking an unsurprising capitalistic approach to crypto and digital asset adoption, Trump also pledged that he will also include other cryptocurrencies such as ETH, XRP, SOL and ADA as part of a wider crypto reserve.
Where Villeroy takes issue with Trump’s pro-crypto agenda is the fear of promoting non-banking services that are largely unregulated and risks causing potential financial instability, as consumers may opt for digital currencies over fiat currencies, such as the Euro.
This fear is only heightened further as it seems stablecoins are next on Trump’s crypto agenda. The digital currencies, pegged to fiat currencies to maintain stability, were included in the GENIUS Act that passed approval in the US late last week, but it wasn’t without its critics.
Echoing a similar sentiment to Villeroy, Senator Elizabeth Warren raised concerns regarding the Act’s lack of “basic consumer protections” and crypto’s exposure that “invites scammers into the market by refusing to prohibit people convicted of fraud and money laundering from owning stablecoin companies”.
EU’s regulatory front
Despite more and more financial institutions taking a liking to stablecoins and the potential use cases in accelerating cross-border settlements, Villeroy and the EU are taking a more regulatory approach.
The introduction of the Markets in Crypto Assets (MiCA) became the first comprehensive crypto regulatory bill that enforces clear guidelines for crypto companies entering the EU.
One of its Articles focuses on stablecoins and stablecoin issuers that fall under classification requirements. Stablecoins must refer to the fiat currencies and other commodities it is pegged to and ensure its stability via one single fiat currency.
Tether, the issuer of the world’s largest stablecoin USDT, was the first casualty of MiCA’s stablecoin rules. In June 2024, crypto exchange Bitstamp announced it would delist its Tether’s Euro-pegged stablecoin EURT as the coin did not comply with rules.
Despite a hyper focus on garnering capital support for crypto, Trump has maintained that he would like to see the US crypto sector regulated in some aspect. He will be eagle-eyed on the development of MiCA this year, which has experienced some early growing pains.
In conversation with Payment Expert Senior Business Journalist Callum Williams on iGaming Daily, Elton Dimech, Managing Director of crypto provider Payhound, explored the issues with MiCA at the moment for companies like his and whether it will fuel European crypto adoption.
Crypto, like AI, divides the US and Europe
Much like crypto, Europe and the US are politically divided when it comes to outlining best practices to govern AI.
The EU AI Act was introduced early this year to protect consumers of potentially risky AI models issued and offered by companies within Europe. The Trump administration, however, has opted to invest capital and lax regulation talks in fear that overregulation will stifle innovation and lag behind the rest of the world.
These opposing views were on full display at February’s Paris AI Action Summit, as US Vice President JD Vance warned European delegates that the EU AI Act “could strangle” innovation across the continent.
The US ultimately decided not to sign a declaration that mandated that AI must be “open, inclusive, transparent, ethical, safe, secure and trustworthy”.
This was explored further at a recent MWC Barcelona event panel earlier this month, which Payment Expert was present at.
Whether it pertains to crypto or AI, Europe and the US stand on two differing and defining stances; regulation vs. innovation.
While Villeroy fears that Trump’s crypto agenda will cause negative ramifications to global financial stability, the US President views digital currency as future proofing the country’s financial prospects. Either way, a more unified approach will no doubt help crypto and AI companies across the world when it comes to clear and transparent best practices.
