New EU Parliament Boosts Crypto Industry Confidence

The new European Parliament seems poised to uphold the European Union’s favorable stance towards the cryptocurrency sector. Last week, 185 million voters from 27 member states participated in elections to form the new European Parliament. The European political landscape has experienced a significant shift, marked by an increase in far-right representation, the strengthening of the European People’s Party (EPP), and a decline for the Greens/European Free Alliance (Greens/EFA). The EU now faces the complex challenge of addressing diverse sovereign approaches to contentious issues like EU grant distribution, migration policies, climate change initiatives, energy transitions, and developing a unified defense strategy.

Despite navigating this intricate political terrain, Europe has managed to cater to some needs of the crypto and blockchain industry. This has led to a question about whether the new EU Parliament will maintain its supportive stance towards crypto regulation. Members of the European crypto community have shared their insights on the outcomes of these elections, shedding light on what the future holds for the industry.

The EPP, holding 189 seats, remains the largest and most influential group in the European Parliament. German MEP Markus Ferber from the EPP indicated that the increase of 13 seats compared to the previous election yields stability for the crypto sector. He noted that the EPP’s pragmatic and technology-neutral regulatory approach provides a conducive environment for the industry. According to Ferber, the EPP’s stance is based on a risk-based approach focusing on use cases rather than just the underlying technology, which could lessen pressure on the crypto industry, especially since the center-left parties that were most restrictive have lost a substantial number of seats.

The Greens/EFA now hold 53 seats after losing 18 spots. Notably, this faction had backed measures to block unhosted wallets and even attempted to ban proof-of-work (PoW) crypto mining in Europe. Peter Moricz, partnerships lead at Bitcoin self-wrapping solution DLC.Link, expressed relief that the Green party did not gain more power, implying that EU crypto miners can now operate with less fear of restrictive measures.

An important development is the rise of far-right parties, particularly in Germany and France, which has even led French President Emmanuel Macron to call for snap elections. Michael Gebert, chairman of the European Blockchain Association, remarked that while these parties typically support economic freedom, their conservative stance on financial regulation might result in stricter measures for the crypto industry. For instance, right-wing parties have advocated for more rigorous Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations, demanding greater compliance and stricter transaction reporting.

Despite Europe’s advances in technological regulations, there’s a common perception that it’s still lagging behind the U.S. and China. Europe’s unified crypto regulatory framework, particularly with the Markets in Crypto-Assets Regulation (MiCA), positions it as a significant player in the global crypto industry. Henrique Corrêa da Silva, president of the New Economy Institute, believes crypto offers Europe a chance to stay relevant in the global tech race, as the U.S. and China currently struggle in this domain. Reinis Znotiņš, executive director of the Latvian Blockchain Association, pointed out that U.S. regulatory efforts lag behind, and Europe’s approach has been promising for the crypto industry.

Mark Foster, EU policy lead of the Crypto Council for Innovation, lauded the MiCA as a pioneering effort in global crypto regulation. He asserted that a well-managed unified regulatory scheme could stimulate business across the EU, the world’s largest single market. He noted that unlike the U.S., crypto is not a major political issue in Europe, which might lead to policy continuity despite the latest electoral outcomes.

João Augusto, chief compliance officer of the Spanish exchange Bit2Me, pointed out that the next significant milestone would be MiCA II, to include regulations for decentralized finance (DeFi), non-fungible tokens (NFTs), and decentralized autonomous organizations (DAOs). Foster emphasized the importance of conducting a thorough cost/benefit analysis before embarking on further legislation in these areas.

Regulation within the crypto sector needs to adapt continually to the rapidly evolving landscape. The second version of the MiCA regulation is already in the pipeline. Sebastian Heine, chief risk and compliance officer at Northstake, stressed the urgency for National Regulatory Authorities (NRAs) to outline detailed implementation plans for MiCA, enabling businesses to prepare effectively. He pointed out that Europe needs balanced regulations; while stringent standards offer security, they might also burden smaller companies.

Edwin Mata, CEO and co-founder of Brickken, highlighted the potential of tokenized assets within European jurisdictions and called for incentives to promote this within the EU. He noted that the market for real-world asset tokenization could be massive, and Europe could reap significant benefits by establishing the necessary infrastructure and expertise.

A common thread voiced by industry stakeholders is the need for education and awareness initiatives to update regulators and the public about blockchain and crypto technologies. Mata warned that EU regulations might become overly restrictive if lawmakers don’t fully understand the technology’s potential. Proper and balanced crypto regulation may allow the thriving industry to flourish in Europe, bringing the continent closer to leading the global tech race.