With the increasing adoption of cryptocurrency, regulators worldwide are scrambling to develop policies that will ensure that the industry can thrive while protecting investors and consumers.
However, the United States’ approach to regulating cryptocurrency has been criticized for being unclear and insufficient, leading to concerns among crypto lobbyists and advocates. In contrast, Europe is setting the standards for the industry by establishing holistic regulatory frameworks for the cryptoasset industry, as a recent report shows.
According to Susan Friedman, international policy counsel at Ripple, Europe is outpacing the United States in establishing regulatory frameworks for the cryptoasset industry. She points out that Europe is preparing to activate new laws that are tailor-made for digital asset companies, and many European officials are pitching the EU as a welcoming place for crypto businesses to set up shop.
On the other hand, U.S. politicians are at odds over whether to embrace or discourage the growth of crypto, and regulators are taking matters into their own hands. This uncertainty and lack of clarity have caused the crypto world to lose political clout in recent months.
The advancement of the EU is providing fresh motivation for industry allies in Congress to press ahead with their agenda. As Sen. Cynthia Lummis of Wyoming, a Republican Bitcoin advocate who has drafted a comprehensive crypto regulation bill, says, “The European Union’s ahead of us. Switzerland’s ahead of us.
Australia’s ahead of us. England’s ahead of us. So it’s not just second- and third-world countries.”
The EU’s openness towards crypto is a striking turnaround, considering that they essentially froze out the industry in 2019 when Facebook announced its Libra digital currency. However, this episode prompted lawmakers to draft industry-specific regulations before similar crypto products could take hold on the continent.
The Markets in Crypto-Assets law that EU policymakers came up with, dubbed MiCA, sets strict rules for stablecoins, a type of digital asset like the now-defunct Libra that’s anchored to a national currency or other established financial product. It also creates investor safeguards, capital requirements, and corporate governance rules for the broader crypto market.
