Europe fumbles crypto playbook as Trump’s America leaves it behind

The European Union is stumbling in its attempt to regulate the crypto market while Trump’s America accelerates ahead. With the EU’s Markets in Cryptoassets (MiCA) regulation set to take full effect by year-end, the bloc has already reshaped its own market. Just perhaps not necessarily for the better.

Exchanges have started delisting Tether’s USDT (the most-used stablecoin worldwide) creating massive disruptions for traders. MiCA was supposedly designed to increase transparency and curb crimes like money laundering, and it has triggered criticism for its restrictive approach.

Meanwhile, Trump’s incoming administration is sending bullish signals to crypto markets, pushing Bitcoin past $100,000 and igniting rallies in speculative tokens.

The president, now a crypto lover, is assembling a team of advocates to oversee regulation. Howard Lutnick, CEO of Cantor Fitzgerald, is Trump’s pick to lead the Department of Commerce. Lutnick’s firm already helps custody Tether’s $85 billion in Treasury holdings, signaling a shift toward crypto-friendly policies.

Paul Atkins is the pick to replace anti-crypto Gary Gensler as the chairman of the SEC. Atkins first invested in Bitcoin over a decade ago, making him one of the earliest believers.

Stablecoin delistings disrupt EU markets

The rules mandate that stablecoins listed on centralized exchanges must be issued by entities with e-money licenses. Without this license, exchanges have no choice but to drop USDT by the December 30 deadline.

“I was quite surprised by that,” said OKX Europe CEO Erald Ghoos, whose company dumped USDT for USDC. This disruption is shaking up liquidity across European markets. USDT accounts for a vast majority of trading pairs globally, leaving traders facing higher costs and inefficiencies.

MiCA’s intention to improve regulatory oversight comes with other strict conditions. Issuers must hold up to two-thirds of their reserves in independent banks and monitor all transactions for payment purposes.

Circle, Tether’s competitor, secured an e-money license in July, but Tether has yet to follow suit. The company has not shared with the public whether it plans to apply, leaving its EU market presence uncertain.

MiCA’s limitations and enforcement gaps

Despite MiCA’s ambitions, critics say the regulation falls short of delivering its goals. Reports show USDT is the most-used stablecoin for criminal activities, including terrorism financing, particularly on the Tron blockchain.

Earlier this year, UK authorities dismantled Russian networks using USDT to launder billions for oligarchs and spies. Responding to such cases, Tether partnered with Tron and TRM Labs to create a Financial Crime Unit to combat misuse.

But MiCA alone won’t solve enforcement challenges. Local authorities lack the surveillance tools needed to track transactions effectively. Upgrading these capabilities will take time, leaving a gap that bad actors could exploit.

Despite these challenges, crypto adoption in the EU has seen some growth. A European Central Bank report revealed that crypto ownership in the euro area has doubled to 9% since 2022. However, the ECB warned that the data might be skewed due to changes in survey methodology. The report still described adoption rates as “comparably low.”

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