A Fork in the Road: Looking Ahead to U.S. and E.U. Approaches to Cryptocurrency Regulation

Following the 2024 election, the United States and the European Union are taking divergent approaches to cryptocurrency regulation, reflecting their sharply divergent economic philosophies and strategic goals. The E.U. has implemented a comprehensive regulatory framework with its Markets in Crypto-Assets Regulation (“MiCAR”), effective December 30, 2024, ensuring market stability and consumer protection.[1] Alongside the Transfer of Funds Regulation and the Digital Operational Resilience Act, these regulations integrate digital assets into a banking-style financial system.[2]

Concerned about vulnerabilities tied to U.S. crypto markets, the European Central Bank (ECB) is advocating for a digital euro to safeguard financial sovereignty.[3] MiCAR imposes strict compliance requirements on crypto issuers and service providers, mandating risk management frameworks and capital adequacy standards similar to traditional finance.[4] Despite some potential implementation challenges, the European cryptocurrency industry has welcomed MiCAR’s legal clarity.[5]

In contrast, US cryptocurrency regulation remains unpredictable, primarily due to lack of legislation. Under the Biden Administration, regulatory stances fluctuated due to market surges, political conflicts, and aggressive enforcement by the SEC and CFTC.[6] After initial openness to cryptocurrencies and a Central Bank Digital Currency (“CBDC”) in 2022, regulatory enforcement intensified in 2023, with multiple major cryptocurrency exchanges facing legal challenges.[7] Though bipartisan legislative efforts gained traction in 2024, only stablecoin legislation passed the House, while stalling in the Senate.[8]

The Trump Administration has taken a pro-blockchain, anti-CBDC stance, with stated policy goals of financial stability, privacy, and personal sovereignty.[9] It chooses to promote stablecoins as a method of upholding and continuing the U.S. dollar’s global dominance.[10]  Before the 2024 election, some in the industry pushed for MiCAR as a global model, but the U.S. has rejected E.U.-style regulation, favoring a “market-driven” approach.[11] However, many areas of cooperation remain possible, particularly in law enforcement under Mutual Legal Assistance Treaties (“MLATs”) and requisite compliance under the Bank Secrecy Act. Meanwhile, discussions in the European Parliament suggest the digital euro may be a long-term goal rather than an immediate priority, leaving room for policy shifts.[12]

The primary challenges on regulatory alignment between the United States and the European Union can be partially attributed to the dominance of American crypto firms globally. USD-backed stablecoins make up 90% of crypto market capitalization and 70% of trading volume in Europe.[13] With further regulatory clarity, American firms could move with less fear of adverse government enforcement to further solidify their dominance. Additionally, the E.U.’s strict stance may not align with the present realities of the crypto landscape. MiCAR has a local subsidiary requirement that may clash with the decentralized nature of crypto, potentially becoming a trade barrier, especially under a pro-crypto Trump administration willing to use trade policy to shape financial regulation and achieve broader policy aims. There also remains the threat of extreme and potentially contagious instability. The 2023 collapses of Silicon Valley Bank and Silvergate demonstrated that crypto’s ties to traditional finance are deeper, proving that the two ecosystems are more intertwined than parties in either market would perhaps care to admit.[14] In response, the US is considering a strategic Bitcoin reserve via the BITCOIN Act of 2024, which could form the basis for global liquidity policies.[15]

The European Union and United States are both grappling with the possibility of moving in different directions on a number of policy positions, and it appears that cryptocurrency is no exception. The ideological differences between the centers of power will make it difficult to be on the same page. If the Trump Administration’s stated goal of a robust American crypto market comes to fruition, the regulators in the European Union may be forced to rethink their strategy in taming a wild industry.

Christopher O'Hara is a staff member of Fordham International Law Journal Volume XLVIII. 

[1] Pierre Berger & Nicolas Kalokyris, MiCA & TFR: The Two New Pillars of the EU Crypto-Assets Regulatory Framework, DLA Piper (June 20, 2023).

[2] Id.

[3] Barbara C. Matthews & Hung Tran, The 2025 Crypto Landscape: Looming EU and US Divergences?, Atlantic Council (January 28, 2025).

[4] See 2023 O.J. (L 1114).

[5] Jack Schickler, MiCA, EU’s Comprehensive Crypto Regulation, Explained, CoinDesk, (Sept. 7, 2023, 7:04 a.m. UTC), https://www.coindesk.com/learn/mica-eus-comprehensive-new-crypto-regulation-explained.

[6] Matthews & Tran, supra note 3.

[7] Id.

[8] H.R.4766, 118th Cong. (2023-2024).

[9] See The White House, Strengthening American Leadership in Digital Financial Technology (Jan. 23, 2025).

[10] Id.

[11] Matthews & Tran, supra note 3.

[12] See European Parliament, Directorate-General for Economy, Transformation & Industry, Economic Governance & EMU Scrutiny Unit, Economic Dialogue with the European Commission on the Launch of the 2025 European Semester Cycle, PE 764.343, at 1 (2025).

[13] European Banking Authority & European Securities and Markets Authority, Joint Report on Recent Developments in Crypto-Assets (Article 142 of MiCAR), EBA/Rep/2025/01, at 1 (Jan. 13, 2025).

[14] See Paul Tierno, The Role of Cryptocurrency in the Failures of Silvergate, Silicon Valley, and Signature Banks, Congressional Rsch. Serv. (2023).

[15] BITCOIN Act of 2024, S.4912, 118th Cong. (2024).

This is a student blog post and in no way represents the views of the Fordham International Law Journal.