ECB flags risk of financial contagion from US Crypto push
The European Central Bank (ECB) has expressed concerns about the impact of US support for the crypto industry, particularly regarding dollar-backed stablecoins potentially destabilizing Europe's financial system. The ECB has requested a revision of the Markets in Crypto-Assets Regulation (MiCA) framework, citing fears that US reforms could lead to a capital flight from Europe to US assets, undermining EU financial sovereignty and increasing liquidity risks for banks. The European Commission disagrees, asserting that the current MiCA framework is sufficient to manage stablecoin risks despite new US policies aimed at expanding the crypto sector. The stablecoin market is valued at $234.151 billion. The ECB warns that without stricter limits, European issuers may face redemption pressures, risking a financial "run." Tether, a major stablecoin issuer, criticizes MiCA for its restrictive rules, which have led to delistings from major European exchanges.
