President Trump’s crypto support threatens Europe’s monetary control

The Trump administration is pushing crypto harder than ever, and Europe is not happy about it. Officials in the European Union (EU) are warning that Washington’s growing embrace of Bitcoin and dollar-backed stablecoins could seriously threaten Europe’s financial sovereignty.

Pierre Gramegna, managing director of the European Stability Mechanism (ESM), said Monday in Brussels that the U.S. stance on crypto raises concerns, especially as the European Central Bank (ECB) is still undecided on launching a digital euro.

“The US administration is favorable toward cryptocurrencies and especially dollar-denominated stablecoins, which may raise certain concerns in Europe,” Gramegna told reporters.

He warned that Trump’s push for crypto-backed financial tools could allow American and foreign tech giants to roll out mass payment systems based on stablecoins, potentially undermining the euro’s dominance.

Trump moves forward with Bitcoin reserve

Trump is not waiting for approval from anyone. Last week, he signed an executive order setting up a Bitcoin reserve and a second storage system for crypto assets seized through legal cases.

The decision locks crypto into the U.S. government’s financial system, a major shift from past policies where officials treated it with suspicion.

While the U.S. doubles down on crypto, Europe remains hesitant. The ECB has been developing a digital euro since 2021, but its final decision is still months away.

Unlike the U.S., the ECB has refused to consider Bitcoin for its monetary reserves. Now, with Trump’s latest move, European leaders say they need to accelerate their work to prevent financial instability in the region.

“The digital euro is today more necessary than ever,” Gramegna said, backing the ECB’s urgency. The ESM believes the EU must launch the digital euro soon to protect its monetary autonomy.

Not everyone in Europe agrees on how to handle crypto. Christine Lagarde, president of the ECB, made it clear in January that Bitcoin will never be part of the EU’s official reserves.

“I’m confident that Bitcoins will not enter the reserves of any of the central banks of the General Council,” Lagarde said. She was responding to statements from Ales Michl, governor of the Czech National Bank (CNB), who said his institution might explore Bitcoin investments in December 2024.

The Czech Republic is part of the EU but doesn’t use the euro. Still, Michl’s comments caused enough of a stir that Lagarde had to address them. She emphasized that ECB policymakers agree on keeping reserves liquid, secure, and free from risks like money laundering.

“I had a good conversation with my colleague from the Czech Republic and I leave it to him to make whatever announcement he wants to make,” Lagarde said. But she insisted that the ECB will not accept Bitcoin as a reserve asset.

Czech National Bank considered crypto for a second

Michl confirmed in an interview with the Financial Times in December that the bank is looking into the possibility of adding Bitcoin to its reserves, with a potential allocation of 5%. He later clarified on X that discussions were still in the early stages.

On January 28, the Czech finance minister expressed concerns about the idea, whilst hinting a bit at division within the country’s leadership. Meanwhile, the CNB’s seven-member policy board approved a plan to analyze new investment options, though they didn’t directly mention crypto.

“At the proposal of Governor Ales Michl, the CNB is to assess whether it would be appropriate in terms of diversification and return to include other asset classes,” the board said in a statement. No final decision has been made, and changes won’t happen until the analysis is complete.

Not everyone is convinced that Bitcoin belongs in national reserves. Last month, Christian Lindner, former German finance minister, floated the idea of using Bitcoin as a reserve asset, but the reaction was mostly negative.

Joachim Nagel, president of Germany’s Bundesbank, literally Bitcoin to the tulip mania that crashed the Dutch economy in the 1600s. “Reserve assets must be secure, liquid, and transparent,” Nagel said. “Bitcoin is none of these things.”

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