Separation of the states: How the US, EU differ on crypto
Cryptocurrency is meant to be a global currency. However, when it comes to regulating the space, it is obvious that there is no global consensus. The U.S. appears to be addressing the space in one manner, while the European Union (EU) is formulating its own plan. The U.S. seems to take a heavy-handed approach in light of no clear industry regulations, while the EU is more methodical and analytical in determining how to introduce guidance that can be accepted by all member states.
According to Noelle Acheson, who authored a piece on the differences between the two for Institutional Crypto by CoinDesk, “But it’s more than that. The differences are actually embedded in legal structures and traditions and highlight the unfathomable difficulty of reaching agreement on how the new class of crypto assets should be regulated.”
It goes without saying that creating regulations for any industry is a challenging task; creating them for a world-changing application with global economic consequences is even more difficult. The U.S. may make blanket changes that would cover the entire country at once, but the EU has to answer to all of the nation-states, who, in turn, have to sign off on any regulations.
On the U.S. side, frustrations are mounting as regulators in the country seem to have taken a slow approach to introducing guidance. Given that the U.S. market has traditionally been the largest capitalist market in the world, it is often viewed as the determining factor in how new markets are formed and governed.
Acheson adds, “In the U.S. … 2019 is likely to bring a flurry of actions and statements from the SEC [Securities and Exchange Commission], as unregistered securities offerings are punished, listing proposals are examined and clarity is given as to expectations going forward. While this may influence other securities regulators around the world and edge the sector towards a more comprehensive framework, regional differences and national considerations make that probably wishful thinking.”
The EU, on the other hand, may not be ready to introduce crypto policies for the entire union. It’s possible that individual member states could make headway, but Acheson believes that “the reduced size of the local markets and the fragmented rules governing exchanges and custody are likely to constrain tokens issued in Europe, especially since network effects – which rely on a broad market – are a fundamental part of token valuations.”
Cryptocurrencies are not an “us vs. them” concept. They involve a global currency offering that can impact everyone at any point on the planet. They have already been shown to have real, tangible benefits and can go a long way to averting a global financial meltdown. With a little bit of luck, 2019 will be the year that major governments can pull together and develop the framework that will allow digital currencies to flourish and take their rightful – and expected – place alongside fiat. After all, it’s going to happen with or without the governments’ assistance.
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