US Blockchain, crypto and MICA’s future

Notice how the European cryptocurrency market was valued at USD 6.9 billion in 2024 and is expected to reach USD 27.6 billion by 2033 - a remarkable trajectory. Can Europe continue to downsize its importance? Not really, last year we witnessed the introduction of the Markets in Crypto-Assets (MiCA) regulation. This is the key aspect of the EU’s crypto regulatory landscape in 2025. The purpose of MiCA is to establish uniform rules for issuers of crypto assets that have so far not been regulated by other EU regulations. Malta established its regulatory framework for crypto assets early in 2018.

This made Malta one of the first countries to create a formal regulatory environment for the cryptocurrency industry. When bitcoin was started in 2009, a utopian, anti-authoritarian movement welcomed it but a banking hegemony resisted it. Crypto’s earliest adopters had high hopes about revolutionising finance and defending individuals against expropriation and inflation. They wanted to hand power to small investors, for their cash movements, certainly lower transfer fees by banking intermediaries.

This was more than an asset, it was technology truly liberalizing business. Today with EU regulations this covers transparency and disclosure requirements for issuing, offering, and admitting crypto assets to trading platforms. It includes authorisation and supervision of crypto-asset service providers (CASPs) and issuers of asset-referenced and electronic money tokens. Additionally, it sets standards for the operation, organisation, and governance of issuers and service providers.

The law also provides protection for crypto-asset holders and service provider clients, and enforces measures to prevent insider trading, unlawful disclosure of inside information, and market manipulation. It covers the authorisation and licensing of CASPs, requiring them to follow the rules on governance, financial stability, and operations. MiCA also addresses consumer protection, better informing consumers about associated risks, market integrity, and compliance with AML/CFT rules. How do regulations in the EU differ from the US?

Essentially, the EU has a unified framework, while the US follows a fragmented approach with different agencies enforcing regulations based on asset classification. Besides, in the US, the SEC imposes a standard capital gains tax, while EU member states have different tax rules for cryptocurrencies. Notice how in the US, crypto is in the ascendant. Regulators appointed by Mr Trump are taking a more permissive approach to it. Investors are piling into it. Big pressure groups have sprung up to back political candidates who support it and to punish those who oppose it. The young industry suddenly finds itself at close association with the Trump family.

Perhaps, this is also turning it into something of a partisan cause. Sceptics lament that Mr Trump’s enthusiasm for crypto may end up doing the industry more harm than good. Today it reaches a value higher than $3trn. Democratic lawmakers argue that many investors are going into business with the Trump family or buying Trump-related crypto assets simply to curry favour with the president. Another popular variant to Bitcoin, are Stablecoins which are typically backed by cash or government bonds and run on public blockchains. The champion is tether-it accounts for 70% of coin activity. They are mostly used to trade with other cryptocurrencies, providing a stable bridge between shakier digital assets. Such tokens are pegged to the dollar or other assets. With hindsight, we recall, how the Biden administration had worked hard to prevent the crypto industry from infiltrating Wall Street.

Tight rules made it prohibitively expensive for banks to hold digital assets on behalf of clients, and stopped them from pioneering their own crypto products, including stablecoins. Post Trump’s administration, many are experimenting with crypto tokens that convey ownership of shares in money-market funds. They are also set to begin building up their trading and custody of crypto assets as soon as they can be certain about the details of the regulatory regime. Quoting Chainalysis, a data firm, trading, payments and transfers in stablecoins hit $27.6trn last year or two-fifths of all value settled on public blockchains, moving up from a fifth in 2020.

Tether as a coin, insists its model is secure. It has proved resilient: Paolo Ardoino, Tether’s boss, is critical of the rules, especially a requirement that stablecoins must hold 60% of reserves in bank deposits. But readers ask has crypto been used badly to help finance illegal deals. The jury are out but many believe crypto has facilitated fraud, money-laundering and other flavours of financial crime on a gingerly scale. In Europe, one finds a severe contrast with what is happening inside America.

Jurisdictions such as the European Union, Japan, Singapore, Switzerland and the United Arab Emirates have managed to give digital assets new regulatory clarity in recent years. In parts of the developing world, where expropriation by governments is rife, inflation is highest and the debasement of currencies is a real risk, crypto still fulfils something like the role that the early idealists once hoped it would. In reality, many agree that crypto is slowly being taken more seriously by mainstream financial firms and tech companies.

The amount of real-world assets, which have been “tokenised” to be traded on a blockchain has almost tripled over the past 18 months. Noted financial institutions like BlackRock and Franklin Templeton are large issuers of tokenised money-market funds. Crypto firms have become involved, offering tokens pegged to assets such as gold. Another interesting aspect is the use of stablecoins by payment firms. Mastercard has said it will allow customers and merchants to pay and settle transactions in stablecoins.

Stripe, a fintech firm, has launched stablecoin financial accounts in 101 countries. This year, it also bought Bridge, a stablecoin platform. Observers think how this is an ideal opportunity for banks which are still scared from offering services to crypto firms and from dabbling in crypto. In that sense the banking sector is facing a transitional stage. In the US, it appears that the regulatory pendulum has now swung hard in the opposite direction, as most of the cases against crypto firms have been abandoned. MFSA in Malta has been one of the early believers in blockchain and VFA legislation, will its unique heritage reignite the path for a renaissance?