US and European policymakers are taking divergent approaches to cryptocurrency regulation, with potential implications for global financial stability. In the US, the Senate Banking Committee is preparing to vote on a revised stablecoin regulation bill that could establish clearer oversight for issuers like Tether and Circle. Meanwhile, European finance officials are voicing concerns over President Donald Trump’s favorable stance on digital assets, warning that an increase in dollar-backed stablecoins could threaten the euro’s monetary sovereignty. As regulatory frameworks evolve on both sides of the Atlantic, the future of stablecoins and digital currencies remains a key area of debate.
EU Finance Officials Sound Alarm Over Trump’s Crypto Embrace and Its Impact on Monetary Sovereignty
Senior finance officials within the European Union (EU) have raised concerns about US President Donald Trump’s favorable stance toward digital assets. The growing affinity of the US administration towards cryptocurrencies—particularly dollar-backed stablecoins—has sparked fears that Europe’s monetary sovereignty and financial stability could be at risk.
During a Eurogroup press conference on March 10, European Stability Mechanism (ESM) Managing Director Pierre Gramegna expressed his concerns, emphasizing that Washington’s evolving crypto policies could reignite major foreign and US tech companies’ ambitions to develop mass payment solutions based on stablecoins denominated in US dollars.
“The US administration is favorable toward cryptocurrencies and especially dollar-denominated stablecoins, which may raise certain concerns in Europe,” Gramegna stated. “And if this were to be successful, it could affect the euro area’s monetary sovereignty and financial stability.”
The ESM, an intergovernmental institution designed to help maintain financial stability within the euro area, has voiced strong support for accelerating the development of a European central bank digital currency (CBDC), known as the digital euro. According to Gramegna, the urgency behind launching the digital euro is greater than ever, with European authorities needing to safeguard the continent’s financial independence in the face of America’s shifting stance on cryptocurrencies.
“The ESM supports the ECB’s urgency in making the digital euro a reality to safeguard Europe’s strategic autonomy—this digital euro is today more necessary than ever,” Gramegna emphasized.
His remarks were echoed by Irish Finance Minister Paschal Donohoe, who highlighted the broader implications of US policy shifts on Europe’s economic landscape. “Policy developments in other jurisdictions can have important consequences for us here in Europe,” Donohoe noted. He stressed that discussions surrounding the digital euro are not just a matter of innovation but are “fundamentally linked to our own autonomy and to the resilience of our currency.”
The European Central Bank (ECB) has been actively working on developing a CBDC since 2020, exploring both consumer-facing retail digital euro models and wholesale cross-border settlements between financial institutions. In February, the ECB announced an expansion of its CBDC payment system to facilitate institutional transactions. This move aligns with the ECB’s broader strategy to maintain financial sovereignty and reduce reliance on non-European digital payment systems.
ECB President Christine Lagarde has consistently maintained a skeptical stance on integrating cryptocurrencies like Bitcoin into the European financial system. In a statement made in late January, Lagarde reiterated that central banks must prioritize assets that are “liquid, secure, and safe,” making it unlikely that Bitcoin or other volatile digital assets will be incorporated into European monetary reserves.
Trump’s Diverging Approach to Digital Assets
While the EU pushes for a state-controlled digital currency, the US approach under Donald Trump’s influence appears to be taking a different trajectory. In January, Trump signed an executive order prohibiting the establishment, issuance, and circulation of a Federal Reserve-backed CBDC. Instead, the administration formed a crypto working group to explore alternative policies that prioritize private sector innovation in digital assets.
Trump’s resistance to a state-controlled digital dollar stands in contrast to the Biden administration’s previous exploratory efforts regarding a US CBDC. His stance aligns more closely with pro-crypto factions advocating for decentralized financial solutions rather than government-issued digital money.
The divergence in US and EU approaches to digital currencies shows a widening transatlantic rift in financial policy. While Europe views a digital euro as essential for economic sovereignty, the US, under Trump’s influence, appears to favor a more laissez-faire approach that encourages private sector dominance in the crypto space.
European policymakers are concerned that an influx of dollar-backed stablecoins in the region could diminish the role of the euro in global trade and financial transactions. With major US firms potentially launching mass-market stablecoin payment solutions, European economies could find themselves increasingly dependent on American-controlled financial infrastructure—a scenario EU officials want to avoid.
As the ECB continues to refine its digital euro project and the US administration shapes its approach to cryptocurrency regulation, the global financial order may be poised for significant changes. Whether these diverging policies will lead to economic conflict or a redefined digital currency ecosystem remains to be seen, but one thing is clear: the geopolitical battle over financial sovereignty in the digital age has only just begun.
US Senate Banking Committee to Vote on Updated Stablecoin Regulation Bill
In related news, the US Senate Banking Committee is set to vote on a revised Republican-led stablecoin framework bill, known as the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, on March 13. The bill, originally introduced by Senator Bill Hagerty in early February, has undergone significant updates following bipartisan consultations, incorporating changes that address consumer protections, risk mitigation, regulatory pathways, and transparency requirements.
Senator Hagerty, one of the bill’s key sponsors, confirmed on March 10 that the updated version of the GENIUS Act would be put to a vote in the Senate Banking Committee. The bill enjoys bipartisan support, with Republican Senators Cynthia Lummis and Tim Scott (the committee chair) co-sponsoring alongside Democratic Senators Kirsten Gillibrand and Angela Alsobrooks.
“The updated version of the GENIUS Act makes significant improvements to a number of important provisions, including consumer protections, authorized stablecoin issuers, risk mitigation, state pathways, insolvency, transparency, and more,” said Senator Gillibrand in a statement.
The bill aims to bring US dollar stablecoin issuers with market caps exceeding $10 billion—currently limited to Tether’s USDT and Circle’s USDC—under the regulatory oversight of the Federal Reserve. Smaller issuers with market caps below this threshold would have the option to comply with state-level regulations.
The updated version of the GENIUS Act introduces stricter requirements for foreign stablecoin issuers, potentially giving US-issued stablecoins a competitive advantage. Dom Kwok, co-founder of Web3 learning app EasyA, noted on X that the bill’s latest provisions impose “extra high standards” on foreign issuers, particularly in reserve and liquidity requirements, anti-money laundering (AML) checks, and sanctions compliance.
“Most foreign issuers will find these standards hard to meet,” Kwok said, suggesting that these requirements position US-based stablecoins, such as Circle’s USDC and Ripple Labs’ Ripple USD (RLUSD), favorably in the market.
Prominent crypto attorney Jeremy Hogan of Hogan & Hogan echoed similar sentiments, arguing that the bill’s stipulations on reserves and AML compliance “all fall neatly for RLUSD and USDC.”
Regulatory Challenges Ahead
While the GENIUS Act is making progress, it still faces multiple legislative hurdles before becoming law. If the Senate Banking Committee approves the bill on March 13, it will then be presented for a full Senate vote, where it could be subject to further debate and amendments.
Should the Senate pass the bill, it will then proceed to the House of Representatives. If the House makes no modifications, the bill will be sent to President Donald Trump for final approval. However, if the House alters any provisions, the bill would require reconciliation before reaching the president’s desk, where he could either sign it into law or veto it.
The GENIUS Act is one of the most comprehensive efforts to regulate stablecoins in the United States. Its passage could redefine the landscape for digital asset-backed currencies, particularly by establishing clear compliance pathways for major issuers.
The bill’s impact extends beyond the US market. With foreign issuers facing higher regulatory scrutiny, non-US stablecoin providers may struggle to meet the stringent reserve and AML requirements. This could, in turn, solidify the dominance of American stablecoins in global markets, particularly USDC and RLUSD, both of which align closely with the bill’s regulatory framework.
As the Senate Banking Committee prepares to vote, all eyes will be on how lawmakers balance regulatory oversight with the need to foster innovation in the fast-evolving digital finance sector. If the GENIUS Act advances successfully, it will mark a significant step in defining the role of stablecoins in the US financial ecosystem.
