Perspective by: Mateusz Kara, co-creator and CEO of Ari10
President Donald Trump’s return to leadership has indicated the onset of a new chapter for cryptocurrency in the US, yet the nation has significant ground to cover to align with Europe.
Trump has proposed ambitious initiatives and made broad commitments to transform the US into a crypto sanctuary. During this year’s World Economic Forum in Davos, Trump vowed to establish the US as the “world capital” of crypto, with an array of supportive policies, investments, and regulatory transparency to follow suit.
Cryptocurrency is rapidly emerging as a strategically significant sector and is projected to reach $38.6 billion by 2030. A competition to obtain crypto market share is looming, and while Trump fortifies the US regulatory toolkit for competition, the EU has been quietly instituting its own regulatory structure: Markets in Crypto-Assets Regulation (MiCA).
With MiCA in place, the EU enjoys a considerable lead and is poised to dominate the sector in the long term, conceding a few contests to Trump’s visibility — yet ultimately prevailing in the larger competition.
Trump’s charisma must be complemented by actionable policies
Trump’s brand of charisma, cultivated through bold maneuvers and significant, often nebulous promises, has placed the US in the limelight as a crypto frontrunner. His celebrity appeal is attracting interest and excitement from prominent crypto innovators. Nevertheless, uncertainties linger regarding Trump’s ability to transform his pro-crypto rhetoric into practical measures.
Initial signs indicate that important legislation aimed at promoting innovation and the expansion of the US crypto sector is forthcoming. What remains absent at the moment is a comprehensive framework that would offer clarity to businesses throughout the blockchain landscape.
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Trump has appointed several pro-crypto figures to prominent positions, beginning with the selection of Paul Atkins as chair of the Securities and Exchange Commission and assigning Commissioner Hester Peirce to spearhead the newly formed SEC task force dedicated to establishing precise crypto regulation. Merely days after taking office, on Jan. 23, Trump enacted an executive order to create a “national digital asset stockpile,” setting the groundwork for a regulatory structure relating to stablecoins.
Although Trump is indicating that cryptocurrency is a key focus in his administration, much more is required than a disjointed array of existing regulations and the signing of executive directives. A comprehensive regulatory strategy will be essential to effectively compete with the EU.
MiCA establishes a robust regulatory framework
Considering the growing significance of the crypto sector, the EU has not been idle regarding crypto policy. It has crafted a thorough regulatory scheme, MiCA, which is set to be fully operational by Dec. 30, 2024.
In contrast to the narrow policies and regulations currently under consideration by the Trump administration, MiCA is extensive and encompasses all crypto assets, including those previously excluded from traditional financial service laws. It seeks to provide clarity for businesses and consumers by endorsing market integrity, financial stability, and transparency. Firms are mandated to apply for and obtain a license to function within the EU.
While some enterprises have raised concerns, the general market perspective on MiCA remains optimistic, with businesses appreciating the regulatory clarity. The crypto sector is still relatively nascent, largely led by numerous startups that require support to thrive in their early stages, when capital resources may be restricted. The regulations of MiCA pose a risk of depleting startups of vital funds, as adapting to MiCA will involve operational complexities and elevated costs.
Some startups have indicated that to navigate this challenge, they will move to more favorable regulatory settings, such as the US. However, evidence implies that the repercussions of this will be confined to the most speculative startups and initiatives and, consequently, will establish the benchmark for all developments following its enactment.
While regulatory accuracy is crucial, some argue that MiCA may be excessively rigid and risk hindering innovation through overregulation. The adverse impact on innovation appears to be conjectural, however, and the current crypto community believes MiCA will promote further advancements in the crypto realm and across the wider financial sectors, thanks to developments in digital infrastructure.
Its impact in the coming years will likewise see traditional and decentralized finance converge into something significantly more advanced and sophisticated than what currently exists across the Atlantic.
Cryptocurrencies and blockchain technology are integral to an increasingly vital industry that will support essential technological progress. MiCA offers a robust launchpad for Europe, which is positioning itself as a crypto innovator, ready to capture a substantial portion of the market value. In its wake, the Trump administration endeavors to catch up, but its ostentation and fragmented tactics could impede its long-term efficacy.
While benefiting from Trump’s prominent status in the short term, the SEC must ensure that Trump’s promises are buttressed by robust, consequential, and comprehensive regulation if it aims to retain value in the US and divert it from European markets.
Perspective by: Mateusz Kara, co-creator and CEO of Ari10
This article is intended for general informational purposes and should not be interpreted as legal or financial advice. The views, thoughts, and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph.