While the EU’s regulatory framework has focused on safeguarding users, internal financial stability and monetary sovereignty, the current US administration has favoured private crypto innovation. It stopped US CBDC projects while pushing USD stablecoins as part of a strategy of “cryptomercantilism”. This strategy aims at reinforcing the dominance of the dollar in two main ways: First, by promoting more international use of the dollar for payment and invoicing. Second, since USD stablecoins are issued against US debt, they create new demand for USD debt of public and potentially even private issuers. In the EU, the 2024 Markets in Crypto Assets Regulation (MiCAR) sets adequate safeguards to ensure financial stability and prevent the digital dollarisation of the European economy. Foreign, non-MiCAR compliant stablecoins can be owned by Europeans but not issued to the public by compliant financial institutions. Moreover, the EBA and other regulators—following a binding opinion of the European Central Bank (ECB) — can halt the issuance of foreign-currency denominated stablecoins if they present significant risks […]