Today, the United States is being described as a place of regulatory confusion. This is simply due to how the authorities in the country are behind in the efforts to enact a clear regulatory framework for the crypto industry. Currently, there are more than 70 crypto and blockchain bills before Congress, with no single passage in sight. According to findings, there is a division among parliamentarians as to the right way to regulate cryptocurrency. This is because some of them, particularly Republicans, are critical of the harsh stance of the White House on digital assets.
Efforts to regulate cryptocurrency in the United States
Notably, Joe Biden is a known skeptic of digital assets. Around 2022, he issued an executive order for responsible usage of these assets within the U.S. At that time, the President also mandated agencies to come up with measures to safeguard investors and firms. More so, Biden asked the agencies to carry out necessary oversight to address national issues caused by the illegal usage of digital assets.
In a bid to discourage the usage of these assets, he also initiated a minimum of 25% tax on every unrealized gain and a 30% excise tax on the electricity cost of mining. The White House, in its justification, described the crypto market as a lawless jungle. It also called for the amendment of existing financial service laws to empower the Justice Department of the United States to prosecute crypto-oriented crimes. However, the division among Congressmen has continued to hinder the amendment. This development thus prompted Biden to commence a “go it alone” clampdown on digital assets. The White House resolved to find a way around using the existing financial service laws to regulate the industry. In its justification, the office said provisions of the laws can be applied to digital assets without an amendment.
Driven by this resolution, the President started to use inter-agency activities to clampdown on digital assets in line with financial service laws of the United States. The implementation has resulted in numerous lawsuits, particularly on whether crypto can be regarded as securities and regulated by the existing financial service laws.
How Europe will benefit from the unclear crypto regulation in the United States
The regulatory uncertainty regarding cryptocurrency has forced out numerous firms in the United States. Despite how other regions like Europe and Asia are developing various regulatory standards to embrace the innovation, the United States has refused to emulate their constructive approach. The United States Securities and Exchange Commission (SEC) is on a crackdown against crypto exchanges, filing various suits against them. Instead, the European Union has passed its Markets in Crypto Assets (MiCA) to regulate the virtual assets market.
With the introduction of MiCA, there are emerging questions if Europe will benefit from the regulatory uncertainty in the United States. Definitely, the region will benefit as crypto firms ousted from the United States will venture into Europe. This will be in a bid to find a regulatory-supportive environment. Far away from the SEC and CFTC confusion, the long-awaited Lummis-Gillibrand bill, and the Biden administration’s unclear approach, crypto firms will find Europe as a haven.
Clearly, the provisions of MiCA are comprehensive in that it covers almost every virtual asset with strong attention on fungible tokens. The regulation clearly defines the regulatory difference between cryptocurrency and stablecoin. With these definitions, every stakeholder in the virtual asset landscape of Europe will understand their role. Aiding them to devise various ways of keeping it within regulatory requirements. Additionally, the regulation also favors investors against illicit projects. Consequently, Europe with MiCA will not only be favorable to crypto businesses alone. It will as well attract investors to commit their funds to projects from the region. Due to that, the region to some extent will attract investors and firms from the United States.
Meanwhile, Europe has always been an attractive region for crypto firms long before the formulation of MiCA. This is evident in how numerous virtual asset companies have spread their tents to the region. Now, with the introduction of MiCA, Europe will gain more boost as a good business destination for virtual assets firms. However, other regions like Hong Kong, Dubai, and some other Asian countries are in the mix of top conducive regions for virtual assets firms to pitch their tents. This implies that Europe will minimally benefit from the regulatory uncertainty in the United States.