The Trump administration’s pro-crypto agenda risks "sowing the seeds" of a financial crisis, according to a top European Central Bank official.
Interview with French Weekly La Tribune Dimanchei, François Villeroy de Galhau, Governor of the Bank of France and member of the European Central Bank's Governing Council, argued that the U.S. "risks sinning through negligence."
Villeroy de Galhau argued that, "by encouraging crypto assets and non-bank finance," the Trump administration "is sowing the seeds of future upheavals," adding that financial crises "often originate in the United States and spread to the rest of the world.”
His admonitions echo a previous warning from sixteen Nobel Economists who claimed in June last year that Trump's "fiscally irresponsible budgets" could "reignite" inflation and broader economic instability. Villeroy de Galhau argued that Trump pursues a “false vision" in which the global economy functions as a "zero-sum game," calling on Europe to "strengthen" its negotiating position.
Earlier this year, the ECB announced a two-phase digital payments infrastructure initiative, under which it plans to explore “a more integrated, long-term solution” for settlements of central bank money-denominated transactions on a blockchain. The project would be the first step in creating a central-bank digital currency.
Trump’s crypto-agenda
In the lead-up to and after the U.S. elections, President Donald Trump has vowed, acted, and worked on his administration's promises to embrace and bolster the country's leadership in crypto and digital assets.
The Trump Administration has made a number of moves to boost the cryptocurrency industry in its first few months. It established a Crypto Council, created a Presidential Working Group for digital assets, passed important crypto legislation, issued an executive order establishing a Bitcoin Reserve and hosted the White House’s inaugural crypto summit.
Trump’s push for crypto has not been able to stabilize the crypto market. Both Bitcoin and U.S. equity markets have suffered from market volatility triggered by Trump’s economic agenda. Following Trump's threat to impose 200% tariffs on European spirits on Thursday last week, the S&P 500 plummeted more than 10% from its February high, reporting from Reuters indicates.
Bitcoin, at the time, tumbled to $81,600—down 25% from a January peak of $109,000. The same day, the crypto market saw a liquidation of more than $1 billion. Analysts attributed this to risk-aversion on global markets, as well as escalating U.S. trade disputes.
