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In their escalating conflict with US authorities, cryptocurrency advocates now have a new weapon: Europe wants their business.
As U.S. regulators start enforcing decades-old laws for trading and banking in the cryptocurrency realm, industry executives are increasingly using the trans-Atlantic comparison to call for simpler regulations. As Congress is still far from creating a federal standard for digital money, President Joe Biden’s regulators are filling the gap.
In contrast, the European Union is getting ready to implement new legislation specifically designed for businesses that deal in digital assets. Several European leaders are starting to promote the EU as a friendly location for cryptocurrency enterprises to open their doors.
Stefan Berger, a conservative German member who oversaw the development of the EU’s forthcoming crypto regulations, declared that “we will have the greatest framework in the world in which enterprises may thrive.” “Everything you need for a viable market will be here.”
No American policymaker is in a position to make this claim since American politicians disagree on whether to support or oppose the expansion of cryptocurrency, and regulators are resolving the issue on their own. The failure of the digital asset exchange FTX only made things worse by exposing widespread industry mismanagement and bringing down Sam Bankman-Fried, the firm’s former chief executive and once-important crypto player in Washington. By stating that the United States is lagging behind other nations in the absence of clearer laws, lobbyists and sympathetic politicians domestically are attempting to maintain pressure on Congress.
America’s standing as a worldwide financial center and an advocate for innovation is at risk. The success of the EU is giving industry friends in Congress new impetus to promote their goal, despite the crypto business losing political power in recent months.
We are behind the European Union. The Swiss are in front of us. Australia is in front of us, according to Wyoming senator Cynthia Lummis, a supporter of Bitcoin and author of a comprehensive plan to regulate cryptocurrencies. “England is in front of us. So, it is not limited to developing and third-world nations.
Because U.S. industry regulation is based on a patchwork of state-level laws and licenses operating alongside federal financial safeguards created for traditional banks, traditional stock trading, and commodities exchanges, it stands out from EU regulation.
Notwithstanding the contradictions, crypto has been thriving in the US system for years, due to cooperative state-level policies and minimal interference from Washington.
Federal officials, however, who have run out of tolerance with what they see to be gross violations of conventional financial norms on investments and loans, are starting to impose a broad crackdown on the industry.
According to Kristin Smith, CEO of the Washington-based Blockchain Association,
We’re sensing a crypto carpet-bombing moment, where they appear to be attempting to hurl anything they can within their jurisdiction — or perhaps surpassing their authority — and we believe that’s stupid. We believe it harms American competitiveness.
The EU’s embrace of cryptocurrencies is a startling about-face from its previous position, which saw the sector virtually frozen out when Facebook, now known as Meta, unveiled its Libra digital currency in 2019.
The idea was essentially put on hold by European regulators, who were motivated by concerns about big tech making money off of individual investors.
Before comparable crypto goods could gain traction on the continent, that incident forced politicians to develop sector-specific laws.
Stablecoins are a class of digital asset, like the now-defunct Libra, that are tied to a national currency or other well-established financial instrument. The Markets in Crypto-Assets law, or MiCA, was developed by EU officials and establishes rigorous regulations for stablecoins. Moreover, it establishes corporate governance guidelines, capital requirements, and investor protections for the bigger crypto market. Aides to US congressmen were recently in Brussels to discuss the new bill with EU officials.
We fully expect Europe to become a natural hub for responsible participants moving forward. “Europe is clearly outpacing the U.S. by establishing holistic regulatory frameworks for the cryptoasset industry,” said Susan Friedman, international policy counsel at Ripple, a digital currency company that is fighting an SEC enforcement action in court.
Several European authorities are worried that the new regulation won’t be enough to prevent another fiasco at a major cryptocurrency firm like FTX. They want to build more precautions on top.
Ernest Urtasun, a left-leaning Green politician from Spain who contributed to the creation of the rules, stated that MiCA “is a nice start in the right direction, but it is clearly not flawless or complete.” To address the regulatory and supervisory problems we are now facing, more effort has to be done.
The crypto business may view some aspects of the EU framework as more lenient than “the plain effort now in the United States to just implement the regulations that exist,” according to Mark Hays, a senior policy analyst at
Americans for Financial Reform
According to Hays,
EU regulations are exceptionally convoluted because of the conflict between the European Commission, the Council, and the parliament, and that’s an atmosphere in which industrial lobbyists flourish.
The pressure from the cryptocurrency business in the US is ineffective because Congress is unconcerned by the idea of Europe stealing market share. The EU, according to some leading crypto company players, is still not a friendly location to do business.
Sherrod Brown, D-Ohio, the chair of the Senate Banking Committee and a skeptic of virtual currencies, stated in an interview,
Crypto, it’s not like it provides that many jobs. Companies always threaten to offshore when they’re gaming the system.
At stablecoin issuer Circle, Dante Disparte is the chief strategy officer and head of global policy. He stated that he would choose the murky regulatory environment in the United States “over the nearly five years of hurry up and wait the Europeans have embarked on” when drafting and enacting their new law.
Disparte talks from personal knowledge. He was a key figure in the Facebook Libra project, which was put on hold by EU regulators.
You might not like the fact that the states continue to function as the nation’s primary hubs for fintech innovation because of a constitutional problem in the country, he warned. Nonetheless, that is a strong feature rather than a defect.
Related
- The SEC’s Stablecoin Crackdown May Change The Crypto Industry As A Whole
- U.S. Government Takes A Round Of Moves To Clamp Down On The Crypto Sectors
- Operation Choke Point 2.0: US goes after crypto amid confusion and uncertainty
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