US Bitcoin Reserve Could Trigger Financial Crisis: Villeroy

• Villeroy warns that Bitcoin reserve could trigger a financial crisis and global instability. 
• Pierre Gramegan warned that the Euro’s importance could dim if the US inclines to crypto. 
• Villeroy supported ESMA’s call for unified supervision to boost investor protection.

In a bid to reshape the crypto landscape, U.S. President Donald Trump established the strategic Bitcoin reserve on March 7, 2025, sparking mixed reactions from the community. Although several countries have given their approval to use Bitcoin in their reserves, some have opted out of the plan citing financial risks. 

In an interview with French Weekly La Tribune Dimanche, Francois Villeroy de Galhau, a member of the European Central Bank Governing Council stated that the U.S. is bringing a financial emergency by supporting cryptocurrencies and non-bank finance. Stressing the importance of the euro, Villeroy emphasized that European supervision was better secured and that there was no risk of a banking crisis. He further said, 

<blockquotes>” 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. Europe needs a powerful savings and investment union, capable of attracting international investors to our currency.”</blockquotes>

Meanwhile, Pierre Gramegan, managing director of the European Stability Mechanism, warned that the growing support of the U.S. for cryptocurrencies could undermine Europe’s monetary autonomy. He also cautioned that the US shift on digital currencies may drive tech firms to expand dollar-backed stablecoins, weakening the euro’s global role and increasing the reliance on USD.

Related: Christine Lagarde Dismisses Bitcoin as ECB Reserve Asset

Europe’s Digital Euro Stance

In January, Villeroy emphasized asset tokenization as a key driver for faster trade settlements. He supported the European Securities and Markets Authority’s (ESMA) call for unified supervision of digital asset providers to enhance investor protection. In addition, he also praised the MiCA regulation but warned that failing to regulate crypto and non-banks could trigger a future financial crisis. Villeroy added that a central bank digital currency would ensure trust and convertibility in tokenized assets. However, ECB research found low consumer interest in a digital euro despite its role in addressing declining cash use and increasing digital payments. 

The growing divide between the U.S. and Europe in terms of crypto regulation highlights a deeper struggle over financial stability. While the U.S. embraces crypto, Villeroy and Pierre warn of financial risks and a weaker euro. Whether the U.S.’s crypto-friendly approach sparks innovation or instability in Europe remains to be seen.

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