Could U.S. Crypto Policies Trigger a Global Crisis? ECB Warns

A top European Central Bank (ECB) official has expressed alarm about the US government's attitude to cryptocurrencies and non-bank finance, saying that such measures might precipitate the next global financial catastrophe. Francois Villeroy de Galhau, a member of the ECB's Governing Council, told French daily La Tribune Dimanche that “the United States risks sinning through negligence.”

Villeroy underlined that financial crises frequently originate in the United States before spreading elsewhere. He argues that the US administration's support for crypto-assets and non-bank financing is creating the framework for possible global financial system disruptions.

The ECB official emphasized that Europe's financial system is secure, saying there is “no risk of a banking crisis in the bloc.” His comments reflect rising worry among European authorities about the possible disruptive impact of the United States' regulatory position on digital assets and alternative financial systems.

The US government, under former President Donald Trump, has taken dramatic moves to embrace digital assets. Trump issued an executive order to build a strategic bitcoin reserve and a digital asset stockpile, with the goal of using cryptocurrencies to boost national economic growth. This program has resulted in substantial legislative action at the federal and state levels.

Senator Cynthia Lummis sponsored the BITCOIN Act, which proposes acquiring one million bitcoins to add to the US reserve, representing approximately 5% of the entire bitcoin supply. In addition, Congressman Nick Begich introduced companion legislation to strengthen the program.

Some governments, like Texas, have presented their own laws, with the Texas Senate recently adopting SB 21 to establish a state-level bitcoin reserve. This legislative adjustment reflects a rising trend of diversifying public assets by investing in Bitcoin to boost financial resilience.

Meanwhile, with the retirement of previous SEC Chair Gary Gensler, the US Securities and Exchange Commission (SEC) abandoned legal actions against many cryptocurrency firms. This adjustment in posture indicates a movement in US policy toward incorporating digital assets into the mainstream financial system, away from the more rigorous regulation approach of past administrations.

Beyond financial stability, Villeroy addressed Europe's need to boost the euro's position in the global economy. He claimed that Europe needs “build a powerful savings and investment union” in order to entice global investors to the euro. This statement emphasizes the European Union's continuous efforts to lessen its reliance on the US currency and strengthen the euro's position in international commerce and banking.

European leaders have long sought measures to make the euro a more appealing reserve currency. However, progress has been sluggish due to fragmented financial policies within the European Union. Villeroy's views support the ECB's viewpoint that a unified financial system is critical to Europe's economic strength and independence from the US dollar.