Crypto Rules in Europe vs. the US: Does Your Stablecoin Strategy Need To Change?
Written by
T. Woods
Edited by
Jenna Klaverweiden
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President Donald Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act into law on July 18, enacting one of the first major pieces of cryptocurrency legislation in America.
While the law pertains only to stablecoins (a cryptocurrency with stable valuation attached to reliable assets like gold or the U.S. dollar), it is a major step forward for the government regulation of cryptocurrency in the United States.
Crypto Regulations: America vs. Europe
It was also a significant move forward for the U.S. to catch up with other world governments that have more concretized regulatory frameworks for crypto markets. The European Union (EU), for instance, enacted the Markets in Crypto-Assets (MiCA) Regulation on Dec. 30, 2024, which unifies crypto guidelines amid all member states of the EU. The goal of MiCA is to protect crypto investors, create crypto guidelines and maintain the strength of the EU’s markets.
Further, according to Chatham House, MiCA “comprehensively sets rules for digital asset issuers and service providers in a way that should facilitate innovation without threatening financial stability.” And it could be a catalyst for other crypto innovations, per EY.
One of those is a central bank digital currency (CBDC) via an official “digital euro.” CBDCs are official digital legal tender. On the other hand, many stablecoins are privately issued and thus often have inconsistent levels of regulation and oversight by comparison.
While the GENIUS Act aims to provide a regulatory framework for stablecoins, some have concerns. For example, Christine Lagarde, president of the European Central Bank, expressed worries regarding the GENIUS Act. According to the World Economic Forum, she noted that stablecoins that are backed by the U.S. dollar pose a threat to monetary policy and European autonomy. She has pushed for developing a digital euro, and in a recent speech, she explained that it is a “strategy priority” that could safeguard the monetary system in Europe.
Post-GENIUS Stablecoin Strategy for America
Meanwhile, American crypto legislation has yet to be nearly as comprehensive as the EU’s, and America may be on a markedly different path overall by placing a premium upon the privately backed stablecoin.
Currently, per McKinsey & Company, stablecoin circulation accounts for less than 1% of all global money transactions (approximately $30 billion). While growing exponentially in popularity, they are still a small part of the overall crypto market. For Americans who utilize stablecoins domestically, the GENIUS Act offers far more oversight in the U.S. marketplace, with fewer possibilities for scams and a system of consumer protections now in place to guardrail your digital wallet.
Despite the guidance, there are still a lot of questions about stablecoins and how they are viewed by governments. According to BFRR, the U.S. and EU frame the strategic role of stablecoins differently. The U.S. views them as a geopolitical tool, whereas the EU is more suspicious. Therefore, until there is potentially a regulatory confluence between the U.S. and the EU, investors could consider playing it safe, focusing investments domestically and adjusting crypto strategies, as it remains to be seen how the stablecoin market could be impacted by the differing views of the asset.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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