There’s a silver lining amid the turmoil faced by crypto firms in the US. Now, the affected parties are considering making an exodus to Europe where the political, financial, and regulatory climates are more welcoming for them.
US Vs. EU Crypto Climate
In the United States, there is no federal standard for digital currency, and the regulation of the crypto industry is a patchwork of state-level rules and federal financial safeguards designed for traditional banks and exchanges. However, federal agencies are beginning to crack down on what they see as non-compliance with traditional financial regulations.
Industry leaders and sympathetic lawmakers are calling for clearer regulations to avoid falling behind the rest of the world. Their fingers point to Europe as an example of a more welcoming environment for crypto businesses.
In contrast to the US, the European Union is continuing to activate new laws tailored specifically for digital asset companies, with many officials pitching the EU as a welcoming place for crypto businesses to set up shop. The EU’s new rules will come into force in the second half of 2024 and are being touted as the “best framework in the world” for crypto companies to develop.
The EU’s openness toward crypto is a striking turnaround from its initial freeze-out of the industry when Facebook (now known as Meta) announced its Libra digital currency in 2019.
Ripple Boss Warns of Crypto Firms Moving Out of the US
Ripple CEO Brad Garlinghouse warned that the US Securities and Exchange Commission’s (SEC) “regulation through enforcement” is not the “healthy way” to regulate a relatively young industry. He cautioned that the tight leash is now driving away crypto companies.
Garlinghouse said that the exodus of crypto firms may lead to the US missing out on the upcoming innovations in both blockchain and crypto. Among the places he mentioned where these companies are currently heading are Switzerland, the UK, Australia, Japan, and Singapore where the crypto regulation process is way ahead. He added the regulators in these areas took more “time and thoughtfulness” in crafting “clear rules on the road”.
Ripple is currently waiting for the summary judgment of its Supreme Court case against the SEC. In the said case, the SEC claimed that Ripple’s $1.3 billion issuance of XRP tokens to fund its platform constitutes the sale of securities. Meanwhile, the defendant alleged that the regulator failed to provide fair notice.
Blockchain Association Thinks There’s a Crypto Carpet-Bombing Moment Going On
For Blockchain Association CEO Kristin Smith, it appears that US regulators are carpet-bombing crypto firms in their jurisdiction. The crypto-lobbying group’s head feels like the SEC is just throwing whatever it can into the industry.
According to her, the ongoing mayhem is causing the interest of investors in the space to diminish. The “no-stone-left-unturned” approach of the SEC in scrutinizing all things related to the industry, including stakeholders, exchanges, venture capitalists, lenders, and service providers, among others, is causing investors to bring their business elsewhere.
The US and the EU are certainly employing polarizing approaches in handling crypto firms following the scandals that have rocked the industry. However, it is clear that the “regulation through enforcement” method without clear rules on what things are prohibited and failure to provide clear solutions to rectify the issues raised along the way don’t always work and may backfire badly. The US regulators should take a page or two on how the EU is enforcing its crypto regulations in place.