The Impact of Trump’s Executive Order on the Stablecoin Market and European Financial Autonomy

The Impact of Trump’s Executive Order on the Stablecoin Market and European Financial Autonomy

U.S. President Donald Trump’s executive order on digital financial technology has heightened the European Union’s apprehensions regarding the dominance of the U.S. dollar in the global stablecoin market.

At the 13th ILF Conference on the Future of the Financial Sector held in Frankfurt on January 24, Piero Cipollone, a member of the European Central Bank’s (ECB) executive board, discussed the strategic importance of the digital euro. Cipollone highlighted the EU’s need to strengthen its financial and strategic autonomy in the face of growing reliance on the U.S. dollar and American-dominated payment systems.

Alarming U.S. Dollar Dominance in Stablecoins

During the panel discussion, Cipollone expressed concern about the overwhelming presence of the U.S. dollar in the stablecoin market, which has become a significant driver behind the EU’s push to develop its own central bank digital currency (CBDC). He noted that dollar-backed stablecoins currently account for 97% of the global stablecoin market, which is valued at approximately $215 billion, according to data from CoinGecko.

This dominance reflects a broader trend of dependence on U.S. financial systems. For instance, more than 60% of card payments within the EU are settled through international card schemes, most of which are U.S.-based. Cipollone also pointed to the rise of mobile app payments, which surged from representing 1% of daily retail transactions in 2019 to 9% in 2024.

To mitigate these dependencies, Cipollone underscored the importance of the digital euro, which aims to ensure European citizens maintain access to central bank money while enabling European banks to retain their vital role in the financial ecosystem.

Trump Administration’s Push for Dollar Sovereignty

While the EU focuses on the development of its CBDC, the Trump administration took steps to strengthen the U.S. dollar’s dominance through its executive order on “Strengthening American Leadership in Digital Financial Technology.” This order called for the promotion of dollar-backed stablecoins to bolster the dollar’s sovereignty in global markets.

Notably, the executive order explicitly prohibits the creation, issuance, and use of central bank digital currencies within the United States, presenting potential roadblocks for international CBDC initiatives.

Is Dollar Supremacy the Executive Order’s True Goal?

The executive order has been interpreted by some as part of Trump’s broader pro-crypto stance. However, others view it as a strategic effort to ensure the U.S. dollar remains the world’s reserve currency.

David Lesperance, an attorney and expert on cryptocurrency regulations, described the order as a mechanism to place the U.S. at the forefront of digital financial innovation. However, Lesperance emphasized that the administration’s support for these advancements comes with a caveat: they must not undermine the dollar’s global supremacy.

“Trump is clearly using bargaining chips, such as the threat of tariffs, to pressure the EU and other economies into aligning with a similar ban on CBDCs,” Lesperance remarked, suggesting that the administration might actively work to curtail the development of CBDCs on a global scale.

The Battle for Digital Financial Leadership

As the EU accelerates efforts to introduce the digital euro, the competing priorities of fostering digital financial innovation and safeguarding economic sovereignty remain at the forefront of global discussions. While the Trump administration’s executive order solidifies the U.S. commitment to dollar-backed stablecoins, it also signals potential resistance to the global rise of CBDCs—a dynamic that could reshape the future of the financial landscape.