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Industry executives have warned that Donald Trump’s embrace of cryptocurrencies could undermine Europe’s upcoming digital asset rules, as companies ignore the continent in favor of the friendlier U.S. market.
Companies such as Binance, the world’s largest cryptocurrency exchange, said they would refocus their attention on the United States after Trump pledged to make the country “the crypto capital of the planet.”
Executives and analysts say a crypto-friendly White House would exert a powerful pull, rivaling the EU’s landmark new rules that take effect on Dec. 30.
The group’s rules, known as Markets in Crypto-Assets Regulation (MiCA), will put guardrails in place for the public following the collapse of companies such as exchange FTX and lenders such as Genesis and Celsius. The standard has been praised by the industry in the past as a potential benchmark for global crypto asset regulation.
“Under the last U.S. administration . . . MiCA did seem like a good way to think about the cryptocurrency industry without completely stifling innovation,” said Eswar Prasad, a senior fellow at the Brookings Institution.
But after Trump wins, “we will see any form of cryptocurrency-related activity shift away from Europe because things will be much easier in the United States,” he added. “[MiCA] will be viewed as very strict.
Trump’s victory helped Bitcoin hit an all-time high of $108,000 this year, more than double its price a year ago. Retail and institutional investors are enthusiastic about Trump’s pledge to end a harsh regulatory crackdown in the U.S. in recent years.
He also nominated cryptocurrency advocate Paul Atkins to chair the U.S. Securities and Exchange Commission and venture capitalist David Sacks to advise the president on cryptocurrency and artificial intelligence policy. “We’re going to do some great things with cryptocurrencies,” he said last week.
The EU’s MiCA rules will regulate the issuance of cryptocurrencies, including stablecoins, as well as digital asset services such as custody and trading, requiring companies providing these services to be authorized in the EU.
Yulia Makarova, special counsel at law firm Cooley, said compliance with MiCA would “especially increase costs for new startups”. “Ongoing compliance costs may push businesses to the brink of survival,” she added, warning that cryptocurrency startups may choose to do business in the United States rather than the European Union.
Some companies, including U.S. cryptocurrency exchange Coinbase and stablecoin USDC operator Circle, have obtained EU licenses. However, other cryptocurrencies, such as Tether, the world’s largest stablecoin, will not comply with the new rules and will be delisted by local regulated exchanges.
“The new government may make MiCA lose some of its luster and edge,” said Denzel Walters, head of Luxembourg at market maker B2C2. “But I still think MiCA offers a very good opportunity for the digital asset market, ” he added.
Executives are betting that Trump and a new wave of pro-cryptocurrency politicians in Washington will also make progress on new legislation on crypto assets, which in turn will pave the way for traditional financial institutions to put money into cryptocurrencies.
Cryptocurrency companies that abandoned U.S. services for fear of being cracked down by regulators or banned are already planning a return. Norman Reed, interim CEO of cryptocurrency exchange Binance US, said: “We are closer than ever to restoring U.S. dollar services, and our plan is to achieve this important milestone in early 2025.” “It is not a question of if, but It’s a question of when,” he added.
