There is contrasting approaches to cryptocurrency regulation between the United States and the European Union (EU). While the U.S. Securities and Exchange Commission (SEC) has been criticized for its perceived regulation by enforcement strategy, the EU has introduced a new framework called Markets in Crypto Assets (MiCA) to provide greater clarity to blockchain innovators.
European officials believe that the EU’s regulatory approach could give it a competitive advantage over the U.S. in the cryptocurrency industry.
Businesses are reportedly turning to the EU for growth and risk management due to the uncertainty surrounding U.S. regulations. The EU’s approach involves regulating first and then assessing market responses, which proponents argue is more conducive to encouraging innovation in the crypto space.
The SEC has recently filed lawsuits against major crypto exchanges Binance and Coinbase, arguing that they should have registered to offer crypto trading, clearing, and brokerage services. However, Binance’s U.S. arm has called the claims baseless, and Coinbase’s Chief Legal Officer has expressed concerns about the impact on U.S. competitiveness.
In contrast, the EU has implemented MiCA as a tailored regulatory regime that aligns better with the nature of cryptocurrencies. The hope here is that this approach eliminates the uncertain enforcement seen in the U.S. The implementation of MiCA will require further clarification from national and European regulatory agencies over the next 12-18 months.
France as an EU member with a well-developed crypto licensing regime, and French regulators have expressed their openness to welcoming U.S. companies that may consider relocating due to the new MiCA framework.
Some U.S. lawmakers have acknowledged Europe’s success in legislating for crypto and have suggested that it should concern Americans, as it could boost innovation in Europe.
The UK on the other hand has taken a more look-and-learn approach and let others make the mistakes, before taking the leap; leading to crypto innovators in the UK having to base many of their operations offshore (ironically including in Europe).