On 1 July, the European Union's comprehensive crypto-asset regulation, known as MiCA, came into full force across all 27 member states. The aim was clear: replace a fragmented patchwork of national rules with a single, strict regime to protect investors and curb scams. Yet the rollout has been underwhelming. Fewer than one in five of Europe's roughly 1,200 registered crypto companies managed to obtain a license under the new framework. Those without one face an effective shutdown of their operations within the bloc.
Major players like Coinbase cleared the bar, but giants such as Binance were forced to exit the EU market. The regulation was designed to bring order to the so-called Wild West of digital assets, but it may already be outdated. The reason lies not in Brussels but in Washington.
Stablecoins and the Dollar's Digital Reach
Last summer, former President Donald Trump signed the GENIUS Act, a US law that provides a regulatory framework for stablecoins—digital currencies pegged to the US dollar to maintain a stable value. These tokens are not a niche product; they dominate the crypto market. According to industry data, 95% of all stablecoins are tied to the American currency. The GENIUS Act effectively turns stablecoins into a tool for expanding American financial influence abroad.
Money, after all, is power. By backing stablecoins with US dollars and US Treasury bonds, Washington is creating a digital dollar that can circulate globally without the need for traditional banking infrastructure. This poses a direct challenge to the EU's regulatory ambitions.
As reported by Euronews, the new EU rules fail to adequately address stablecoins issued outside the bloc. Foreign companies can simply bypass the regulations by offering their tokens to European users from non-EU jurisdictions. EU diplomats have already acknowledged that the rules must be amended by 2027 to close this loophole. The European Commission is expected to propose revisions next year, focusing on how tokens created outside the EU are regulated within the single market.
The situation underscores a broader tension in European tech policy: the desire for robust consumer protection versus the risk of falling behind in a fast-moving global industry. While the EU has been methodically building its regulatory fortress, the US has moved to rewrite the rules of the game. The result is that European investors may still be exposed to unregulated stablecoins, while European crypto firms face a compliance burden that their non-EU competitors do not.
For context, the EU's economic landscape is already under strain. As European Central Bank President Christine Lagarde has warned, the continent faces a crossroads amid global trade tensions and sluggish growth. The crypto regulation saga adds another layer of complexity to the bloc's efforts to maintain its competitive edge.
Meanwhile, the global governance of artificial intelligence is also evolving. The AI for Good Summit in Geneva recently set an attendance record, highlighting the growing international focus on regulating emerging technologies. The EU's experience with crypto may offer lessons for how it approaches AI regulation.
For now, the message from Brussels is clear: the crypto rulebook is not set in stone. The next revision, expected in 2027, will need to address the stablecoin loophole and the broader challenge of regulating a borderless technology. Until then, European investors should be aware that the protections they expect may not apply to tokens issued from outside the EU. As one EU diplomat put it, the rules must evolve to keep pace with a market that does not respect national borders.
