Learning Objectives:

  • Understand the EU Markets in Crypto-Assets Regulation (MiCAR) and its key provisions.

  • Analyse the US approach to cryptocurrency regulation.

  • Explain the role of international standards and the FATF.

  • Identify future trends in crypto regulation.

7.1 The EU Markets in Crypto-Assets Regulation (MiCAR)

The EU’s MiCAR is a comprehensive framework for crypto-asset regulation that entered into force on December 30, 2024. The Chinese Academy of Social Sciences notes that “the European Union’s regulation on markets in crypto-assets (MiCA) officially entering into force” represents a “significant change” in the regulatory landscape . The Fordham Law Journal states that the EU “has implemented a comprehensive regulatory framework with its Markets in Crypto-Assets Regulation (‘MiCAR’)” .

Key Provisions:

  • Classification of Crypto-Assets: MiCAR “classifies crypto-assets into electronic money tokens pegged to a single fiat currency, asset-referenced tokens backed by baskets of assets, and utility tokens designed for specific services” .

  • Issuer Requirements: MiCAR imposes strict compliance requirements on crypto issuers and service providers .

  • Consumer Protection: “Mandates risk management frameworks and capital adequacy standards similar to traditional finance” .

  • Stablecoin Regulation: The Fordham Law Journal notes that MiCAR requires issuers to maintain 100% asset reserves and bans algorithmic stablecoins .

  • Exclusions: “Fully decentralized assets, non-fungible tokens (NFTs), CBDCs, and security tokens fall outside MiCA’s scope” .

Industry Reception: “Despite some potential implementation challenges, the European cryptocurrency industry has welcomed MiCAR’s legal clarity” .

7.2 The US Approach

The US approach to cryptocurrency regulation has been described as “unpredictable, primarily due to lack of legislation” . The Fordham Law Journal notes that “under the Biden Administration, regulatory stances fluctuated due to market surges, political conflicts, and aggressive enforcement by the SEC and CFTC” .

Key Developments:

  • Trump Administration: “The Trump Administration has taken a pro-blockchain, anti-CBDC stance, with stated policy goals of financial stability, privacy, and personal sovereignty” .

  • Strategic Bitcoin Reserve: The Chinese Academy of Social Sciences notes that “the US announced the creation of a strategic Bitcoin reserve and digital asset reserve” .

  • GENIUS Act: The Fordham Law Journal notes that the GENIUS Act “brings stablecoins under federal supervision” and “establishes a unified legal framework for stablecoins” .

  • Anti-CBDC: The US prohibits CBDCs .

  • Market-Driven Approach: “The U.S. has rejected E.U.-style regulation, favoring a ‘market-driven’ approach” .

Divergence from the EU: “The United States and the European Union are taking divergent approaches to cryptocurrency regulation, reflecting their sharply divergent economic philosophies and strategic goals” . The Fordham Law Journal notes that “the ideological differences between the centers of power will make it difficult to be on the same page” .

7.3 International Standards

  • FATF Standards: The Financial Action Task Force has established standards for crypto-asset regulation, focusing on AML/CFT compliance.

  • Basel Committee: The Bank for International Settlements has issued guidance on prudential treatment of crypto-assets.

  • IOSCO: The International Organization of Securities Commissions has provided guidance on crypto-asset regulation.

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