Crypto Regulations Could Become Another Transatlantic Power Struggle #CriptoNews

The current state of US-European geopolitics may rightly be dominating much of the media, but it’s far from the only area of disagreement between the two historic allies. The regulatory treatment of digital assets has long been a point of divergence.

Throughout Joe Biden’s presidency, with Gary Gensler at the helm of the SEC, the US became less of a regulatory gray area than a black hole for operators – even those willing to play ball. The announcement in June 2023 that it had Coinbase in its crosshairs for acting as an unregistered securities dealer following the company’s IPO only two years previously was a particularly low point for the industry.

At the same time, the EU’s slow regulatory wheels were grinding away, culminating in the implementation of the EU’s MiCA regulation last year. Given the state of play in the US, many firms seemed prepared to shift their strategic focus to the European markets. Indeed, a spate of MiCA license applications have recently been awarded to firms, including eToro, Okxand Bitget.

But it’s clear that under the Trump administration, the US crypto regulatory landscape is set to change significantly. The question is how, and with the EU’s MiCA now in implementation, what will it mean for the industry as a whole?

A shift in the stablecoin landscape

Given their demand and market dominance, stablecoins aren’t going anywhere, but how they’re treated already looks set to be a key area of divergence. MiCA imposes strict rules on issuers – to the point that USDT is now delisted from several European exchanges due to Tether’s failure to comply. Germany’s financial regulator, BaFin, has also identified deficiencies in Etherna’s USDe that are in violation of MiCA requirements and ordered an immediate issuance halt.

However, Donald Trump has put stablecoins at the forefront of his new cryptocurrency agenda, with a view to preserving the dollar’s supremacy by securing the future of established giants USDT and USDC.

Different positions on central bank digital currencies (CBDCs) also explain these diverging approaches. While the EU appears committed to developing a digital euroone of Trump’s first executive orders was to rule out the development of a dollar equivalent, a position on which he campaigned.

Uncertainty for CASPs

While the position on stablecoins may be somewhat clear, crypto-asset service providers (CASPs) have less certainty about how they will be regulated in the future and, as such, how to manage any regulatory conflicts between the EU and US rules. The CASP category encompasses everything from the smallest exchange startup to the international trading giants, along with established financial institutions and everything in between.

As the industry has developed and regulation has become increasingly inevitable, more crypto-native firms have moved to showcase their compliance credentials while remaining at the edge of industry developments. One example is Transak, which holds multiple licenses and approvals to operate internationally while supporting an industry-wide array of assets and platforms for on- and off-ramping.

Even so, there’s often still a prevailing perception in crypto that regulation, in any form, stifles innovation. The crypto firms that campaigned for Trump are undoubtedly hoping for a relatively relaxed legal framework that will stimulate VC investment of the kind that’s propelled the industry to mainstream success over the last decade.

The broader international investment markets are already experiencing jitters as a result of developments from the White House. So, while crypto-native operators may celebrate a light touch to regulation, it remains to be seen how it will influence the digital asset strategy of banks and other TradFi operators. Will they opt for the unbounded opportunity of the US, even if some of the regulations may be reined in four years? It’s an entire era in crypto but a relatively short-term timeframe for a global bank when considering strategic ventures.

In this sense, the stable grounds of the EU, albeit with the more arduous compliance burdens that MiCA imposes, could be a more appealing prospect for long-term investment. Banks, including Garanti BBVA, Société Generale, and Deutsche Bank have all ventured into digital assets.

With that said, in the short term, the agility and established market share of crypto-native firms are likely to be significant strengths to which they can play against the possible threat of institutional incomers. An operator such as Nexo can attract high net worth (HNW) investors interested in leveraging some of the unique returns offered by digital assets, such as staking – areas where banks are still reluctant to move.

While regulatory divergence between the US and the EU is clear, both regions are shaping crypto’s future in ways that will have lasting global implications. The EU’s structured approach provides clarity and long-term stability for institutions, while the US, under Trump, seems poised to take a more market-driven, pro-innovation stance. Whether this divergence fosters competition or forces eventual alignment remains to be seen, but one thing is certain: the events over this period will define the industry’s trajectory for years to come.