The new European parliament is set to continue the European Union’s relatively supportive policies toward the cryptocurrency industry.
Last week, 185 million EU voters from 27 member states took part in the elections to choose the new European Parliament.
The European political arena has transformed thanks to a surge in representation from the far-right wing, the consolidation of the European People’s Party (EPP) and the decline of the Greens/European Free Alliance (Greens/EFA).
The EU faces the difficult task of politically satisfying the continent’s overall complexity as sovereign countries take different approaches to touchy topics, such as the distribution of EU grants, migration and asylum policy, climate change and energy transition, or forming a common defense strategy.
Despite this complex political field, Europe has managed to address some of the needs of the crypto and blockchain industry.
Will this new EU Parliament favor crypto regulation? The European crypto community has spoken to Cointelegraph to examine the aftermath of the elections.
New parliament is good for the crypto industry
The largest and most influential group in the European Parliament, the EPP, has 189 seats in the EU Parliament.
German MEP Markus Ferber from the EPP told Cointelegraph that he believes that the surge of 13 seats compared to the last EU elections provides stability for the crypto industry, as the “EPP often has a more pragmatic and technology-neutral approach to regulation.”
Ferber explained that the EPP’s neutrality on technology is based upon its risk-based approach that looks at use cases and not only the underlying technology.
He said there has been a significant shift in the EU Parliament that could remove pressure against the crypto industry. Ferber noted that the center-left parties that were “most eager to restrain crypto in every way possible” have lost many seats.
The Greens/EFA EU have 53 seats after losing 18 spots.
In 2022, this political faction stood behind the vote to block unhosted wallets and even tried to ban proof-of-work (PoW) crypto mining in Europe.
Peter Moricz, partnerships lead of Bitcoin (BTC) self-wrapping solution DLC.Link, told Cointelegraph that the new parliamentary balance has been a relief for crypto miners:
“Not having the Green party gain much power, EU crypto miners can sleep better at night.”
Also significant is the surge of far-right parties, particularly in Germany and France, two economic powerhouses.
This rise in support for far-right parties has been so substantial that it prompted French President Emmanuel Macron to call for snap elections.
Michael Gebert, chairman of the European Blockchain Association, told Cointelegraph that these parties don’t necessarily support the crypto industry: “While right-wing parties often support economic freedom, their conservative stance on financial regulation could lead to stricter measures.”
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Gerber said that right-wing parties have demanded stricter Know Your Customer and Anti-Money Laundering requirements, mandated stricter transaction reporting and increased compliance costs through licensing and regular audits.
France, with National Rally (NR) from Marine Le Pen, and Germany, with Alternative for Germany (AfD) from Alice Weidel, are not known for their openness toward cryptocurrencies. However, both are hesitant to adopt the upcoming digital euro.
EU’s first-mover position in crypto regulation is at stake
Although there is a common perception that Europe is losing in the technological competition with the United States and China, the adoption of unified crypto regulation throughout EU countries has made Europe a promising global actor within the crypto industry.
Henrique Corrêa da Silva, president of the tech think tank New Economy Institute, told Cointelegraph that he believes that “crypto stands as one of the best opportunities for Europe to avoid losing another train in the global tech race.”
He added that Europe must continue on this path, as the “U.S. and China have lost the plot — for now.”
Reinis Znotiņš, executive director of the Latvian Blockchain Association, told Cointelegraph that “U.S. regulation and ecosystem development significantly lack behind” and that the approach of the last EU Parliament has been promising for the crypto industry.
The creation of the Markets in Crypto-Assets Regulation (MiCA) has made Europe a pioneer in global crypto regulation.
Mark Foster, EU policy lead of the Crypto Council for Innovation, told Cointelegraph that MiCA has given Europe a first-mover advantage. If appropriately managed, he believes the unified crypto regulation could “foster business” across the world’s biggest single market.
He believes a significant difference between the U.S. and China is that “crypto is not a party political issue in Europe […] Crypto is not a divisive right-left issue” and, therefore, expects “policy continuity” after the last voting results.
João Augusto, chief compliance officer of Spanish exchange Bit2Me, told Cointelegraph that the next critical milestone is MiCA II, which will include regulations for decentralized finance (DeFi), non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs) that aren’t currently covered.
Foster believes the EU should undertake a careful “cost/benefit analysis before embarking on further legislation — e.g., on staking, DeFi or NFTs” — as there is much at stake.
Europe’s crypto industry needs balanced regulations
Regulation is a living organism that needs to be constantly updated or tweaked as the crypto industry evolves, and the second version of the MiCA regulation is already in the works.
Sebastian Heine, chief risk and compliance officer at institutional staking partner Northstake, told Cointelegraph that National Regulatory Authorities (NRAs) need to release missing expectations for the “detailed implementation of MiCA so companies can prepare earlier and be more targeted.”
He believes that Europe’s new focus should be leveraging its high regulatory standards to “connect the digital asset space quicker with TradFi.”
Heine highlighted the need for balanced regulation, as the EU’s high regulatory standards may represent a double-edged sword for the crypto industry.
On one hand, it provides investors and partners with a “high level of security for companies that strive for that level of compliance and regulation.” But on the other hand, smaller companies “may find this regulation a burden.”
Edwin Mata, CEO and co-founder of token-suite Brickken, told Cointelegraph that he believes the European Parliament should create incentives for the issuance of tokenized assets within European jurisdictions.
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Mata believes that the potential market for real world asset (RWA) tokenization is enormous, with “trillions of euros at stake.” He believes that Europe could benefit from RWA tokenization, as “the capital, expertise and infrastructure needed for this rising market could be established within the EU.”
One common denominator required by crypto industry actors is the need to invest in education and awareness initiatives to inform regulators and the public about the potential of blockchain and crypto technologies.
Mata believes that EU regulation may become overly restrictive if EU lawmakers “lack a deep understanding of the technology’s potential.”
Europe has been lagging in its stride to lead the global tech race. Proper crypto regulation may help a quickly evolving industry flourish on the old continent.
