Europe’s Crypto Regulations Are Leaving US In The Dust, Ripple Exec Says
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The world of crypto regulation is evolving as different regions are taking different approaches globally. Recently, Ripple CEO Brad Garlinghouse expressed his cautious optimism concerning regulatory clarity on Crypto in the US. Commenting on the 118th Congress, the CEO pointed to bills, including the Cryptocurrency Facilitation for Investors and Digital Assets Act (RFIA), the Securities Clarity Act, and the Clarification for Digital Tokens Act.
Today is the first day of the 118th Congress. While prior efforts at regulatory clarity for crypto in the US have stalled, I am cautiously optimistic that 2023 is the year we will (finally!) see a breakthrough. A thread on why…
— Brad Garlinghouse (@bgarlinghouse) January 3, 2023
However, Garlinghouse noted that no bill is perfect, and there likely never will be one that satisfies everyone.
Perfect should not be the enemy of progress-these proposals provide more than a starting point for debate in this new Congress.
Additionally, the Ripple CEO praised some countries with established crypto frameworks, including Brazil, the EU, Japan, and Singapore, which are ahead of the US regarding regulation and legislation.
However, according to an international policy counsel at the controversial blockchain currency platform, Susan Friedman, the current regulatory landscape in the US is shattered. As per the reports, she cited the state-level guidelines, and federal financial protections geared towards traditional finance.
Ripple’s executive further said that Europe is creating complete and all-encompassing rules and regulations for the crypto space. She asserted:
We fully expect Europe to become a natural hub for responsible participants going forward.
However, the US is struggling with a disorganized regulatory landscape and legal challenges. On the other hand, Europe is working on a comprehensive regulatory framework that could make it a focus for digital asset platforms.
Initially, the SEC filed a case against Ripple Labs in December 2020, claiming that the payment platform issued XRP as an unregistered security. However, Ripple’s CEO noted that the chances of settling with the SEC are virtually “zero.” He said:
We expect a decision from the judge certainly in 2023.
The Markets in Crypto-Asset Regulation (MiCA)
Markets in Crypto-Asset Regulation (MiCA) aims to close existing EU financial services legislation gaps by establishing rules for crypto assets and related activities. It also creates investor safeguards, capital investments, and corporate governance rules for the broader crypto market.
Despite the concerns that the new regulations may be inadequate, the officials in the EU are promoting the region as a welcoming place for crypto platforms. However, there are disputes between the European Commission, the Council, and Parliament. This has led to some officials calling for additional safeguards.
Pressure from the cryptocurrency world in the US is falling flat.
Some of the officials calling for additional safeguard include, a senior policy analyst at Americans for Financial Reform, Mark Hays. He noted that parts of the EU regime might be more permissive in the crypto industry in contrast to the straightforward effort underway in the US to apply the existing rules. He further asserted that “the tension between the European Commission, the Council, and the parliament means that the EU rules are especially complicated and that an environment in which lobbyists thrive.”
Additionally, the pressure from the crypto space in the US is falling flat with its skeptics in Congress, who need to be more informed by the prospect of Europe taking market share. The Senate Banking Chair Sherrod Brown (D-Ohio), a digital currency critic, noted in an interview that:
Crypto is not like it provides that many jobs. Companies always threaten to offshore when they’re gaming the system.
Notably, a chief strategy officer and head of global policy at stablecoin issuer Circle, Dante Disparte, noted that he would take the US regulatory ambiguity. He said,” over the nearly five years of hurry up and wait, the Europeans have embarked on” while drafting and implementing their new law. Disparte added that,
You might not like that America is stuck in a fintech constitutional crisis that protects and preserves the states as the laboratories of fintech innovation in the country. However, that is a powerful feature, not a bug.
It is worth noting that Disparte speaks from experience. Disparte was among the leaders of Facebook’s Libra project, which the EU stopped from getting off the ground.
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