A senior Italian official has issued a stark warning regarding the potential impact of impending United States regulations on dollar-pegged stablecoins, suggesting they could destabilize the European economy more significantly than traditional trade tariffs.
Concerns are mounting among European leaders over the direction of US stablecoin policy. Speaking at an asset management event in Milan, Italy’s Minister of Economy and Finance, Giancarlo Giorgetti, explicitly stated that these digital asset regulations represent a more profound danger than import duties.
“The general focus these days is on the impact of trade tariffs. However, even more dangerous is the new U.S. policy on cryptocurrencies and in particular that on dollar-denominated stablecoins,” Giorgetti cautioned.
The minister highlighted upcoming regulatory shifts, potentially driven by figures like Donald Trump, referencing the proposed GENIUS Act which aims to establish new operational rules for stablecoin issuers. Trump’s known interest in the sector, alongside ventures linked to his associates, adds another layer to the situation.
Giorgetti articulated a core concern: the potential disruption to the established banking framework. He argued that if regulations like the GENIUS Act enable widespread access to essentially risk-free, dollar-denominated assets outside traditional banking channels, it could siphon off crucial deposits.
“It is therefore easy to foresee their attractiveness for citizens of economies with unstable currencies, but its appeal for people of the euro zone should not be underestimated,” he elaborated. This outflow of funds poses a systemic risk, as banks rely heavily on customer deposits to facilitate lending and credit creation.
Despite some growth in euro-backed stablecoins, the market remains overwhelmingly dominated by USD equivalents, which constitute approximately 99% of the total stablecoin market capitalization. This dominance amplifies the potential impact of US regulatory decisions on global financial flows.
As a countermeasure, Giorgetti advocated for the European Union to accelerate efforts to modernize and unify its fragmented payments infrastructure. He pointed towards the development of a central bank digital currency (CBDC), often referred to as the digital Euro, as a key initiative. Such a move could provide European citizens and businesses with a robust, sovereign digital payment option, reducing reliance on foreign-issued digital assets.