Evolutions in the European Central Bank's Regulatory Stance Toward Cryptocurrencies: From Neutralization to Cooptation

Abstract

ABSTRACT The article argues that the European Central Bank's (ECB) regulatory stance toward cryptocurrencies was underpinned by efforts to preserve legitimacy and monetary sovereignty. Triangulating a content analysis on the ECB's policy statements on cryptocurrencies, examination of European macroeconomic data, and price dynamic analysis of Bitcoin from 2014 to 2025, this article traces an evolution in the ECB's regulatory stance toward cryptocurrencies through two phases that inadvertently abetted cryptocurrency adoption: neutralization (2018–2019) and cooptation (2020‐present). From 2018 to 2019, the ECB assumed a hostile stance toward cryptocurrencies, attempting to neutralize its influence. However, its market‐oriented approach to regulation created a lack of controls over cryptocurrencies and a deregulation of payment processing that enabled their expansion. By 2020, the ECB shifted toward tolerance and even cooptation when unsuccessful policy attempts to contain economic precarity amid the pandemic subsequently incentivized household adoption of cryptocurrencies which, still unregulated, gained notoriety as a prospective alternative source of income. During this period, the shift to digital payments, global isomorphic pressures from the SEC's history with cryptocurrencies, and global currency competition against the Euro energized the ECB's aspirations for a digital Euro, for which it sought to coopt cryptocurrency stablecoin designs and popularity to secure public legitimacy.