The 2025 crypto policy landscape: Looming EU and US divergences?

Digital asset policy begins 2025 in a familiar place: the United States and Europe are prioritizing different pathways towards digital finance. The stakes could not be higher. These policy decisions occur amid growing pressure on the global role of the US dollar and increased European interest in “economic sovereignty” over local payment systems. 

Consistent EU policy posture

When the European Union’s (EU) digital currency regulation (MiCAR) went into effect on December 30, 2024, the EU’s regulatory pillars for crypto asset oversight were completed. Together with the Transfer of Funds Regulation and the Digital Operational Resilience Act, MiCAR extends bank-like rules to stablecoins and cryptocurrencies. The policy addresses financial stability and consumer protection risks arising from cryptocurrencies, most of which are mined outside of the EU. Indeed, the European Central Bank’s (ECB) December 2024 monetary policy minutes indicated that US crypto markets create elevated financial stability risks in the EU. ECB policymakers consistently prefer Central Bank Digital Currencies (CBDC), in the form of a digital euro, over cryptocurrencies to safeguard strategic autonomy and monetary sovereignty for EU businesses and individuals. 

MiCAR applies to the issuance, marketing, and trading of crypto assets and related services. Companies seeking to engage in these activities must comply with bank-like regulatory requirements, including having adequate internal risk management and minimum capital requirements. The regulation applies to three types of coin (e-money) issuers, two of which are stablecoins. All e-money issuers must be licensed as an electronic money institution or a credit institution (i.e. a bank) under the Second Electronic Money Directive. The nascent EU crypto industry supported the new framework because it provides legal certainty.

Conflicting US policy posture

The digital currency policy path from 2021 to 2024 in the United States has not been linear. Dramatic market growth, partisan bickering, and significant fraud-based losses could trigger financial stability issues in the mainstream financial sector and concerns about illicit activity in the crypto sector in the United States. These trends saw the United States careen from supporting both crypto and CBDC in 2022, to a controversial regulation-by-enforcement policy stance in 2023 that the courts consistently invalidated, to multiple bills in Congress during 2024. Bipartisan legislation covering stablecoins passed the House of Representatives in 2024, only to languish in the Senate.

The new Trump administration has spoken decisively. A new executive order states a clear policy directly in conflict with the EU stance. The United States now charts a pro-blockchain, anti-CBDC  policy trajectory on the grounds that CBDCs “threaten the stability of the financial system individual privacy, and the sovereignty of the United States.” It also asserts that “lawful and legitimate” stablecoins support the “sovereignty of the United States dollar.” Digital finance policy formation has been elevated to the White House level through the president’s Working Group on Digital Asset Markets. The policy shift will be bolstered by parallel pro-crypto policy initiatives in Congress and among financial regulators since the November 2024 election: 

• Senate Banking Committee: 2025 legislative priorities include crypto and stablecoin legislation to ensure “compliance with any appropriate Bank Secrecy Act requirements.” 
• House Financial Services Committee: Chairman Travis Hill’s first public statement promised to “create a regulatory framework for digital assets that will protect investors and consumers while keeping innovation in America.”
• Both the House and the Senate have announced investigations and hearings into the “Choke Point 2.0” regulatory policy initiatives that constrained crypto sector access to traditional financial sector liquidity.
• Commodity Futures Trading Commission (CFTC): In November 2024, the CFTC accelerated the ability to use assets besides cash as collateral by increasing reliance on distributed ledger technology.
• Securities and Exchange Commission (SEC): Acting SEC Chairman Mark T. Uyeda formed a new task force to accelerate work on a crypto regulatory framework. The task force will be led by Commissioner Hester Peirce, who has been a leader at the SEC regarding distributed finance and crypto issues.

Potential tension and opportunities for alignment

Before the 2024 presidential election, many viewed the legal certainty provided by MiCAR as creating competitive advantages for nascent EU crypto asset markets. Some promoted MiCAR as a  for crypto assets, encouraging US, UK, and other jurisdictions to converge with the EU standard.

The Trump administration’s newly issued executive order makes clear that MiCAR will not provide a template for US policymakers. Both the crypto industry and traditional banking executives support the initiative to create the first blockchain-native policy framework. attending the World Economic Forum in Switzerland underscored that legal clarity will accelerate crypto use within the traditional banking system.

Transatlantic regulatory alignment is not impossible. In particular, US initiatives that expand the regulatory perimeter to cover cryptocurrencies and require compliance with the Bank Secrecy Act could trigger transatlantic alignment merely because no such comparable financial regulatory requirements exist in the United States today. EU alignment with the new US policy is also possible. Indeed, the European Parliament has observed that the EU Commission’s digital euro CBDC initiative is now a long-term aspiration rather than a near-term priority. Differences between the EU Commission and the European Securities Markets Authority (ESMA) regarding next steps for MiCAR also suggest that more market-friendly regulation could emerge. These kinds of alignment should not be confused with transatlantic regulatory harmonization or convergence, which has been an elusive target for decades in the financial services sector.

1. Market dynamics: US crypto issuers and intermediaries currently dominate EU markets. The 2025 European Banking Authority’s and ESMA’s joint report on recent developments in crypto-assets indicates that USD-based stablecoins constitute 90 percent of market capitalization and over 70 percent of trading volume in Europe. The volume of crypto transactions in Europe, instead, has remained at 8 percent since 2022 even as digital payment volumes increase. Policy clarity could propel US crypto firms to a more dominant position globally, to the detriment of nascent crypto asset markets in Europe. EU businesses may pressure policymakers to seek harmonization with the United States as a consequence.
2. Market access: Many MiCAR components run counter to how crypto markets operate. For example, the distributed nature of connected computers defies traditional regulatory requirements for a local physical subsidiary. MiCAR’s local subsidiary requirements could be vulnerable to trade policy challenges as non-tariff barriers, particularly in the context of a new US government that favors using trade policy to achieve non-trade policy goals. In addition, blockchain-based counterparty anonymity does not align neatly with either MiCAR or the US Bank Secrecy Act.
3. Financial stability: The rapid twin insolvencies in 2023 at Silicon Valley Bank and Silvergate created liquidity pressures both for stablecoins and the traditional banking system. Addressing financial stability risks often involves official sector liquidity support in addition to precautionary regulatory oversight. Initial press reports indicate that the United States may create a strategic bitcoin reserve. TheBITCOIN Act of 2024 (S.4912) introduced by Senator Cynthia Lummis proposed a strategic bitcoin reserve to serve the same role as gold reserves. The legislation was silent on whether, or how, the reserves could be used to provide liquidity support to markets under stress. Any such reserve could create controversy and pressure for comparable strategic reserves globally.

The EU’s preferred crypto policy framework extends the perimeter of banking regulation designed to constrain financial stability risks arising from non-local entities while promoting a regional CBDC.  No details have yet emerged from the US regarding specific regulatory policy choices. However, US policymakers have articulated a clear set of priorities which are dramatically different from the EU. US policymakers seek to support private sector blockchain-based intermediation while declaring instead that CBDC initiatives create financial stability risks.  High level policy alignment is possible. Divergences, heated rhetoric, and drama are inevitable.

Hung Tran is a nonresident senior fellow at the Atlantic Council’s Geoeconomics Center and senior fellow at the Policy Center for the New South; a former senior official at the Institute of International Finance and International Monetary Fund.

Barbara Matthews is a nonresident senior fellow at the Atlantic Council’s Geoeconomics Center. She is also Founder and CEO of BCMstrategy, inc., a company that generates AI training data and signals regarding public policy.

At the intersection of economics, finance, and foreign policy, the GeoEconomics Center is a translation hub with the goal of helping shape a better global economic future.

Further reading

Thu, Jan 23, 2025

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Image: US Dollar and Euro on flags of the United States and European Union.