ECB’s Villeroy Warns: U.S. Crypto Push Could Spark Global Financial Crisis

Arry Hashemi

Mar. 17, 2025

European Central Bank (ECB) Governing Council member François Villeroy de Galhau has issued a stark warning regarding the United States' burgeoning support for cryptocurrencies and non-bank financial institutions, suggesting that such policies may precipitate future financial crises. In a recent interview with French weekly La Tribune Dimanche, Villeroy de Galhau remarked, "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."

During Donald Trump's presidency, the United States has taken a notably supportive approach toward cryptocurrency. (Image Source: Shutterstock)

François Villeroy de Galhau's warnings highlight the potential dangers of the U.S.'s favorable approach to cryptocurrencies and non-bank financial institutions. As digital assets become more embedded in the global financial system, the contrasting regulatory strategies of major economies such as the U.S. and the EU could significantly impact international financial stability.

Under President Donald Trump's administration, the United States has adopted a notably crypto-friendly stance. A pivotal move in this direction is the establishment of a Strategic Bitcoin Reserve, signaling a significant departure from previous regulatory approaches. This initiative aims to position the U.S. as a leader in the digital asset space, fostering innovation and integration of cryptocurrencies into the mainstream financial system.

The U.S. Congress has also made strides in cryptocurrency legislation. The Senate Banking Committee recently passed the Financial Innovation and Technology for the 21st Century Act (FIT21), a bill designed to provide regulatory clarity for digital assets. This legislation delineates responsibilities between the Commodity Futures Trading Commission (CFTC) and the SEC, aiming to balance consumer protection with the promotion of innovation.

Despite bipartisan support, the bill has faced criticism. Senator Elizabeth Warren and others have expressed concerns that the legislation could pave the way for a Big Tech takeover of the dollar, potentially undermining financial stability and consumer protections.

The Securities and Exchange Commission (SEC) has adopted a more relaxed stance toward the cryptocurrency industry. (Image Source: Shutterstock)

In tandem with these developments, the Securities and Exchange Commission (SEC) has exhibited a more lenient approach toward the crypto sector. Notably, the SEC has dismissed several cases against cryptocurrency platforms since President Trump's inauguration, reflecting a broader shift in regulatory attitude.

European officials share Villeroy de Galhau's apprehensions. Eurozone finance ministers have voiced worries that the U.S.'s pro-cryptocurrency policies might compromise the eurozone's monetary sovereignty and financial stability. President Trump's executive order to establish a strategic cryptocurrency reserve represents a substantial pivot from previous policies, prompting discussions among European ministers about the critical need for a digital euro.

The European Central Bank began investigating the idea of a digital euro in 2020. (Image Source: Shutterstock)

The ECB has been exploring the concept of a digital euro since 2020. Officials fear that the U.S. stance might encourage big tech companies to reattempt launching their own cryptocurrency-based payment systems, potentially impacting the euro area's financial stability.

The rapid evolution of crypto-asset markets has raised alarms among global financial regulators. The Financial Stability Board (FSB) warned in February 2022 that crypto-asset markets could reach a scale where they represent a threat to global financial stability due to their structural vulnerabilities and increasing interconnectedness with the traditional financial system.

The IMF has emphasized the importance of a unified, systematic, and thorough strategy for regulating cryptocurrencies. (Image Source: Shutterstock)

The International Monetary Fund has also highlighted the need for a coordinated, consistent, and comprehensive approach to supervising cryptocurrencies. Tobias Adrian, the IMF's financial counsellor, emphasized that while regulation and supervision of crypto asset issuers and service providers don't directly solve macroeconomic and financial stability issues, they are essential foundations for better data collection, effective capital flow measures, and fiscal and tax policies.

The contrasting regulatory approaches between the U.S. and the European Union (EU) are becoming increasingly pronounced. The EU's Markets in Crypto-Assets Regulation (MiCAR), which came into effect in December 2024, extends bank-like rules to stablecoins and cryptocurrencies, addressing financial stability and consumer protection risks. In contrast, the U.S. is moving toward a more permissive regulatory environment, potentially creating challenges for international regulatory harmonization.

François Villeroy de Galhau's cautionary remarks underscore the potential risks associated with the U.S.'s supportive stance on cryptocurrencies and non-bank finance. As the global financial landscape continues to evolve with the integration of digital assets, the divergent regulatory approaches of major economies like the U.S. and the EU may have profound implications for international financial stability. Striking a balance between fostering innovation and ensuring robust regulatory oversight remains a critical challenge for policymakers worldwide.