Competition for Global Leadership

Since the implementation of MICA in the EU and the changes in US policy under President Trump, both jurisdictions have a clear approach, but are under cryptographic law. Europe got a head start by becoming the first to establish a comprehensive, unified regulatory framework for crypto assets. Meanwhile, the US is catching up, increasing the capital it offers and a larger user base.

Manouk Termaaten, CEO of Vertical Studio AI, and Erwin Voloder, Head of Policy at the European Blockchain Association, shared perspectives with Beincrypto in regions where the EU and the US will be leading the way in crypto-legal high steak development and ultimately set the pace of crypto-regulation around the world.

EU mica and early regulations certainty

By implementing the market on December 30, 2024 on Crypto Assets (MICA) regulations, the European Union made history as the first jurisdiction to create a complete regulatory structure for crypto assets that apply to all member states.

Since then, major companies like Standard Chartered, MoonPay, Bitstaete, Crypto.com and OKX have given them several names to secure their licenses.

The United States was slow to act. Instead of lobbying for comprehensive cryptography, industry leaders are focusing on getting approval from the U.S. Securities and Exchange Commission (SEC). Under the Biden administration, it turned out to be a particularly difficult feat.

“The EU definitely had the advantage of first driving in gaining regulatory certainty from the gates with MICA. At the time, the US was withdrawing from leadership in the digital assets sector, and the industry was often facing persecution,” Voloder told Beincrypto.

Former SEC chair Gary Gensler became known to be particularly hostile to technology within the crypto industry walls, and was imposed on enforcement regulations. Pollution has become commonplace, with many innovators packing bags and moving abroad, hoping for opportunities in friendly jurisdictions.

“The US relied on existing institutions like the SEC instead of building a unified cryptography. Gary Gensler cracked down on the market and caused great fear, but he couldn’t get anything.

Now under Trump, things have become quite a turn.

How does the US approach crypto innovation?

The Trump administration aims to promote a predictable environment for US crypto innovation and expansion through a clear regulatory framework. It emphasizes maintaining its innovation within the United States to establish its global leadership.

In pursuit of this goal, the administration has created a working group and a task force, and has developed detailed regulatory frameworks such as Stablecoins and Crypto Asset classification guidelines.

“What we’ve seen so far under the Trump administration is a complete rollback of Biden-era regulations and institutional weaponization against crypto, supporting a light touch, a pro-stance. He’s dismantling the DOJ’s crypto enforcement team. Equity companies, and banks with revelation, are revealed almost every week,” Voloder explained.

As part of this new chapter in Crypto Regulation, the US aims to develop clear cryptographic regulations rather than adopting the EU MICA framework. The intent differs greatly from the European approach.

MICA’s regulatory framework in the EU

MICA provides the EU with a comprehensive, unified regulatory framework for crypto assets that extends bank-like rules focused on financial stability and consumer protection.

The regulations require licenses for crypto service providers and Stablecoin issuers, coordinate with traditional funds, and help protect the creation of central bank digital currency (CBDC) to protect financial sovereignty as the digital euro.

“The EU treats crypto as part of the traditional financial system. It is cautious and centralized, and will prioritize regulations through MICA and the upcoming digital euro (CBDC),” Theraten told Beincrypto.

However, the US operates in contrast.

The US focuses on private innovation and opposition to CBDC

Trump has clearly stated that he intends to eliminate regulations that promote CBDC, citing concerns about government excesses and erosion of economic freedom.

The US is currently charting a policy course that advocates blockchain technology through private innovation, while firmly opposed to CBDC. This stance is highlighted by a recent executive order in which the White House argues that the CBDC “threatening financial system stability, personal privacy, and US sovereignty.”

Trump also made it clear that stubcoins are an innovation priority as they help to strengthen control of the US dollar.

Meanwhile, a particularly fragmented approach has characterized the advances in cryptography in the United States. Without national regulations, certain states have been able to establish early leads, while others have been slow to pursue crypto innovation.

“In particular, under Trump’s recent changes, the US has been leaning violently towards private sector innovation, explicitly opposed to the CBDC, with the US focusing on blockchain from capital. The EU approach is about control and stability.

These fundamentally different philosophies allow analysis in which which regulations have the most favorable results.

What is the financial burden of MICA compliance?

Important investment companies must do so to obtain a MICA operating license. Member countries have different rates, but these are generally steep.

“There are high costs that are not compared to the profits of the business. It also adds a layer of legal complexity that most projects don’t want to bring to the project. With vertical AI, we decided that it would be strategic to move forward with becoming compliance, but others can only geoblock EU users to avoid burdens.

MICA requires minimum capital requirements based on the cryptographic services provided. These range from 50,000 euros for advisory and order-related services, 125,000 euros for exchange and trading platforms, and up to 150,000 euros for custody services. Companies need to maintain this capital as a financial protection measure.

Beyond the minimum capital requirements, businesses must consider government and legal costs, local costs of existence, bank setup, and ongoing operating costs.

“MICA is an expensive regulation. European compliance can be an exorbitant expense. At least for startups, the main challenge going forward is justifying highs like advisories, licensing, audits, and more. Voloder told Beincrypto.

In contrast, the US allows crypto companies to have greater room for innovation.

Flexible regulatory stance and private sector innovation in the US

While the European Union’s MICA regulations establish a comprehensive and structured regulatory environment, the US has opted for a more flexible regulatory stance.

This approach prioritizes the growth of private blockchain innovations and aims to promote rapid development and technological advancement within the crypto industry by providing a less restrictive regulatory environment.

“The US supports innovating the private sector, using US-backed stubcoins, which it believes can expand its dollar control, particularly globally. This approach avoids centralization while enabling innovation in digital payments. It is a very “market lead” philosophy.

If the US continues to develop crypto-friendly laws, it will quickly position itself to surpass Europe in this regulatory race.

“While the EU still leads in terms of the Final Law (MICA), the US is regaining its position by openly endorsing the crypto industry and the clarity of the promising regulations. When that clarity turns into actual, friendly regulations, the US will be particularly attractive than developers and fintech companies who access speed and scale + scale + more capital.” It controls capital, user base and market liquidity. ”

This contrasting approach supports a more agile and less burdensome regulatory environment, demonstrating the fundamental differences in how each jurisdiction envisions the future of digital finance.

Will the US or the EU ultimately secure global leadership?

The European Union has secured early benefits in the global crypto-regulatory environment through MICA’s comprehensive and unified framework, but the thoroughness and critical financial investment required for licensing have miscreated barriers to rapid innovation.

This situation has opened a window of opportunity for the United States, particularly with the change in the administration under Trump. By adopting a more tolerant, innovation-centric approach, dismantling perceived regulatory obstacles and prioritizing private blockchain development, the United States will soon emerge as a favorable jurisdiction for crypto innovation.

Despite European regulatory clarity, it focuses on US flexibility, coupled with its robust capital markets and broad user base, if it can build clear and supportive legislative promises, it will potentially envelop the EU in fostering the next wave of crypto progress.