Why Trump's Crypto Policies Could Spark Global Financial Crisis

French Central Bank Governor François Villeroy de Galhau has raised alarms over former U.S. President Donald Trump's endorsement of cryptocurrency, highlighting that his policies might incite the next global financial crisis.

Trump's pro-cryptocurrency stance emerged prominently in the lead-up to the November 2024 presidential election. His manifesto outlined several policies that captivated digital asset supporters, eager to replace the previous anti-crypto administration.

Villeroy de Galhau's Concerns about Trump's Agenda

In a recent interview with French media, Villeroy de Galhau articulated his apprehensions regarding the U.S. government's promotion of crypto-assets and non-bank financial systems. He believes that these actions could lead to significant economic turmoil.

“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,” he stated.

This critique comes in the wake of Trump’s recent executive initiatives to establish a Strategic Bitcoin Reserve and a separate stockpile of digital assets. These actions have sparked controversy among financial experts, who caution that they could destabilize global markets.

Notably, de Galhau's warning follows a market plunge triggered by Trump's policies. Last week, Bitcoin fell below $85,000, resulting in $250 million in market liquidations. This event underscored the volatility of digital assets and escalated concerns regarding the dangers of government-backed crypto investments.

Additionally, Trump is reportedly preparing an executive order to reverse Operation Choke Point 2.0, a regulation limiting banking access for crypto firms. This move aims to further incorporate cryptocurrency into the traditional financial system (TradFi). Critics argue that this could expose banks and investors to unprecedented risks.

Criticism from Financial Experts

Notable opponents of Trump's pro-crypto view include Peter Schiff, a prominent Bitcoin skeptic. Schiff has harshly criticized the Strategic Bitcoin Reserve initiative, labeling it as “the biggest crypto rug pull of all time.” He argues that this policy might manipulate markets and misappropriate public funds, serving the interests of insiders at the expense of average investors.

Adding to the opposition, a recent poll revealed that most U.S. voters are against Trump’s move for a national Bitcoin reserve. Many Americans express concern that taxpayer money could be squandered on such highly volatile assets, especially in light of Bitcoin's recent market fluctuations.

Europe's Response and Call for Stability

Amid these developments, de Galhau stressed that Europe must adopt a cautious stance and fortify its financial protections against potential fallout from U.S. policies. Beyond new tariffs on Canada, one of France's major concerns is the 25% tariff imposed on the European Union.

“Donald Trump appears to have a distorted view that the global economy functions as a zero-sum game,” he remarked. “We must not react to this aggression passively but assertively, working to establish a balance of power that positions us well for negotiation.”

The ongoing changes in Trump's crypto policies are reshaping the financial landscape, with leaders worldwide holding divergent views on the potential repercussions. As market volatility escalates and regulatory ambiguity increases, the debate surrounding the future of cryptocurrencies within national economies remains unresolved.