It’s been a good summer for digital assets in Europe—especially compared to the cold reception they have endured in the United States. In August, the continent welcomed the launch of its first exchange-traded fund (ETF) in Bitcoin spot markets with the Jacobi FT Wilshire Bitcoin ETF listing in Amsterdam. On the regulatory front, the European Union’s Markets in Crypto Assets (MiCA), a comprehensive framework designed around digital assets, created legal clarity for digital asset companies in the bloc.
However, across the Atlantic, digital assets faced a rougher season. Despite high-profile spot ETF applications by Wall Street heavyweights like BlackRock and Fidelity, the Securities and Exchange Commission has slow-rolled any approvals, dragging Bitcoin markets. Simultaneously, it has continued its crackdown on crypto exchanges while Congress struggles to pass its regulatory bill.
For envious industry players in the U.S., the trans-Atlantic contrast is proof that Europe is surging further ahead. Lars Christensen, CEO of Seier Capital in Switzerland, noted that Europe is “probably a bit ahead of the game” regarding clear regulations, stating that “the U.S. still has work to do.”
Europe’s ascent as a digital asset-friendly jurisdiction is evident. In 2022, Europe overtook the U.S. as a springboard for digital asset startups, with 3,977 launched versus 3,357 in the U.S. Additionally, European startups saw a 14% increase in venture capital investment, while the U.S. experienced a 4% drop last year.
The role reversal between the U.S. and Europe is striking. Traditionally seen as less onerous, U.S. regulations have now fallen behind Europe’s more transparent approach.
Europe’s lead is exemplified by its early adoption of Bitcoin spot ETFs, unlike the U.S., where approval has been elusive. According to Christensen, the debate over market manipulation surrounding spot ETFs has been less contentious in Europe.
In the U.S., a regulatory system intentionally designed to be vague has led to turf wars between agencies and a lack of formal rules and definitions for digital assets. This lack of clarity has driven some U.S. companies to consider moving operations overseas, citing the haphazard regulatory system.
Europe’s bespoke approach, as seen in MiCA, offers more clarity for businesses and regulators. However, the U.S. still boasts deeper capital markets and a vast talent pool, making it competitive.
Nevertheless, the failure of the U.S. to streamline its regulations could adversely affect the global crypto market, given its status as a financial powerhouse. Dave Weisberger, CEO of CoinRoutes, believes that Europe’s embrace of ETF-like products will have a smaller impact than the potential involvement of Wall Street.
Despite the U.S.’s financial dominance, its sense of incumbency could hinder progress, leading companies to relocate overseas. This short-sightedness, as Lowell from Perkins Cole cautioned, may result in the U.S. losing its grip on the evolving global financial landscape.
In conclusion, Europe’s progressive approach to digital asset regulation has put it ahead of the U.S. While the U.S. retains its financial dominance, it must act swiftly to catch up and ensure its place in the future of digital assets. Otherwise, the rest of the world may not wait for the U.S. to get its act together.