European Commission’s Kerstens Responds To SEC Chair Gensler About Bitcoin and MiCA

Peter Kerstens

The popular music, film and interactive festival SXSW (South by Southwest) took place this week in Austin, Texas and included some programming devoted to digital assets.

Unfortunately, several policy luminaries ended up cancelling including Senator Cynthia Lummis (R, WY) and New York Department of Financial Services Superintendent Adrienne Harris. Participating executives from Coinbase and Circle also rotated out senior leadership with executives who lived in the “neighborhood” or were slightly more junior. No doubt the unfolding banking crisis in the United States played a role.

Nevertheless, the show must go on and in a well-attended panel discussion titled, “Regulating Crypto for Responsible Innovation,” Peter Kerstens, an advisor at the European Commission, appeared as scheduled.

Kerstens shared that he participated in the discussions last month with U.S. Congressional staff in Europe about the Markets in Crypto-Assets (MiCA) legislation developed for the European Union.

With the perception by some that the U.S. lacks an appropriate regulatory framework for digital assets, Kerstens welcomed the idea that the United States might participate in what is known as the “Brussels effect.”

He explained on stage:

“I’ve been at the European Commission for 27 years …. one of the things which I have observed is that the US gets to innovate, Asia get to copy and improve, and Europe gets to regulate. We’re always first out of the box with laws and regulation. (…)”

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The Crypto Regulation Winner? EU Holistic Framework vs. US Activity-Based Approach

Hansen and Cameron

At last week’s Converge22 conference in San Francisco, crypto regulation was top of mind for attendees and there was no shortage of relevant content across three days of programming produced by Circle, keepers of the USDC stablecoin.

In a panel titled “View from Across the Pond: Regulatory Change in the EU and UK,” participants reviewed where things stood in relation to the United States.

The panel’s premise was also a helpful reminder of how Facebook’s Libra/Diem project in 2019 inspired fearful regulators across the globe to urgently consider guardrails for the digital asset ecosystem.

As of June 2022 in the European Union, the passage of Markets in Crypto-Assets or MiCA regulation as well as the Transfer of Funds Regulation (TFR) delivered the first holistic regulatory framework for crypto for a large swath of the global population. (For a U.S. corollary, one might point to the proposed Lummis/Gillibrand “Responsible Financial Innovation Act” – a broad framework. Of course, it’s far from being signed into law.)

Patrick Hansen, who is arguably the top source of European Union regulation trends on crypto Twitter as well as an advisor to Presight Capital, joined the panel discussion along with Dr. Lisa Cameron, UK MP and Chair of the Crypto and Digital Assets.

Circle’s VP of Policy and Regulatory Strategy, UK/EU, Teana Baker-Taylor, steered the conversation.

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