The EU Passes New Crypto Regulation as Rest of the World Weighs up Options

Key takeaways

• The EU has agreed on changes to the Capital Requirements Regulation & Directive this week having already passed landmark crypto regulation last month
• The U.K. and U.S. are lacking in crypto regulation laws in comparison
• Hong Kong recently opened up to accepting crypto traders thanks to new financial regulations in the country

The EU has streaked even further ahead of other major economies by introducing another set of rules on how crypto should be regulated in banking, having already introduced the landmark MiCA legislation last month. It leaves other major jurisdictions like the U.S. and U.K. wanting, though not for lack of trying. Let’s get into it.

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What crypto regulation is the EU introducing?

Earlier this week, EU officials hammered out the details on changes to the Capital Requirements Regulation & Directive to include new regulations for crypto assets. The deal is confirmed to include a “transitional prudential regime for crypto assets”, with more details coming soon.

The move comes after the EU signed into law its landmark Markets in Crypto Assets (MiCA) legislation, which made the bloc the first major jurisdiction to have specific rules for the crypto sector. At the same time, it also signed into law a new money-laundering provision regarding crypto providers verifying customer identities.

What crypto regulation exists elsewhere?

Other regimes are certainly behind the EU on developing concrete crypto regulation. Today the U.K. Law Commission has proposed classifying crypto as a new type of asset should be legislated “to better recognize and protect their unique features”. There may be some plans in the pipeline to regulate crypto as financial services in the U.K., but so far no concrete Bills have been introduced.

The U.S., of course, has seen the SEC bring a slew of lawsuits against crypto companies and argued various crypto assets qualify as securities. The crackdown has left many crypto exchanges and traders stuck in expensive litigation or going bankrupt.

In the East, China banned crypto all the way back in 2017 and hasn’t changed its stance much since. However, Hong Kong has newly introduced crypto trading for the second half of 2023, with crypto traders having to apply for licenses.

The bottom line

Crypto regulation is still a thorny topic, depending on who you speak to. But the world is increasingly accepting crypto’s ‘staying power’, as Fed chair Jerome Powell recently called it, and deciding to work with the industry via regulation rather than bury heads in the sand. As it stands, the EY is lightyears ahead of other governments.

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