Even though it is fairer weather in crypto markets now, with the value of crypto assets having peaked at $3.91 trillion in mid-December 2024, an estimated 659 million users worldwide and 85 million blockchain wallet holders, the search for legitimacy and consistency for businesses operating in the crypto eco-system continues. 

Despite and perhaps because of their rapid rise, digital currencies and DeFi (decentralised finance) have been hindered not by technological limitations or consumer apathy but by the absence of legitimacy and clear legal frameworks. But the scenery is changing fast.

Europe’s MiCA, Markets in Crypto-Assets Regulation, took full effect on Dec 30, 2024 as the world’s first comprehensive crypto law and established a unified licensing system across 27 EU countries. Europe was looking like the favourite for capitalising on first-mover advantages by introducing such a thorough regulatory framework.

The US seemed to lag behind not only Europe but also the wider world in terms of crypto regulations. But post-elections, we are witnessing some sharp policy turns from the US. 

There is a divergence between the US’s flexible, market-driven model that is poised to boost existing cryptocurrencies and the EU’s structured regulatory framework that favours stablecoins. So, which environment will prove to support crypto best? And what are the opportunities that crypto offers fintechs and SME’s in light of recent developments?

New Direction in the US: Dominance Through Innovation

Early in 2025, the U.S. dramatically shifted course on crypto, declaring its ambition to become a global leader in digital finance. A Presidential Executive Order established a high-level Crypto Task Force, restructured the SEC’s approach to enforcement, and initiated legislation prioritising pro-crypto innovation. Currently, cryptocurrencies are regulated through various laws and agencies such as SEC, CFTC, FinCEN and the Bank Secrecy Act BSA. There is no single comprehensive law like MiCA yet, but the U.S. is moving towards one. The administration declared its intent to significantly relax or eliminate regulation and enforcement in the crypto markets, signalling a hands-off approach that offers clarity and certainty for the sector.

Another major development has been the U.S. Department of Commerce announcing plans to retain crypto reserves as part of a broader strategy to monitor and integrate digital assets into the financial system. Although not actively acquiring assets at this stage, this policy signals that the U.S. government acknowledges the strategic importance of cryptocurrencies and their potential role in the future economy. 

Significantly, the US explicitly banned the Federal Reserve from creating any potential central bank dollar, citing the threats to stability, privacy and sovereignty. Stablecoins enabled by blockchain technology, on the other hand, may transform the way foreign exchange settlements are made sooner than previously thought. The “stablecoin sandwich model” was cited for having potential by Federal Reserve Governor Waller, although there are still key hurdles, such as the lack of a regulatory framework, industry consensus over fragmented blockchain networks, and greater fiscal policy implications.

In another important move, the U.S. approved Bitcoin and Ethereum spot ETFs (Exchange-Traded Funds), a game-changer for mainstream crypto investment.

Why Do Crypto Spot ETFs Matter?

An Exchange-Traded Fund (ETF) is essentially a basket of assets traded on traditional stock markets just like shares of a company. A Bitcoin or Ethereum spot ETF allows investors to buy into crypto without having to hold the actual digital asset themselves. Instead of dealing with private keys, crypto wallets, or exchanges, investors can purchase shares of a fund that directly holds Bitcoin or Ethereum. The main advantages?

• Accessibility: Institutional and retail investors can gain exposure to crypto through traditional brokerage accounts.
• Security: No need to worry about hacks, lost passwords, or exchange collapses—ETF providers handle custody.
• Regulatory oversight: These ETFs must comply with strict financial regulations, reducing fraud and manipulation risks.

But perhaps the greatest benefit is that by allowing Bitcoin and Ethereum spot ETFs, the U.S. legitimised crypto as an investable asset class, bringing it into the same league as commodities like gold or oil. The move has boosted institutional adoption, with pension funds, hedge funds, and traditional investors entering the crypto space through ETFs.

Will Europe’s First-Mover Advantage with MiCA Fade?

MiCA was signed into law on May 31, 2023. Its provisions began applying in phases, with rules for stablecoins starting on June 30, 2024. MiCA ensures clear rules on stablecoins, crypto exchanges, and consumer protection. The industry welcomed the move, with nearly 1,000 new crypto entities registering in the EU in 2023 alone.

How Are Crypto Markets Performing under MiCA so far?

Crypto exchanges are still in the process of adapting to the new standards. Early data suggests that Europe’s approach has strengthened market stability and encouraged growth.  

• EU-based crypto trading volumes have increased by 28% since Jan 2024, suggesting greater investor confidence.
• Institutional adoption has risen, with more traditional banks launching crypto services.
• Stablecoin market share in the EU grew by 15% as issuers adapted to MiCA’s transparency and reserve requirements.
• Reduced market manipulation cases, as MiCA’s enforcement of market abuse laws has increased surveillance on exchanges.

While global markets remain volatile, Europe offers a crypto-friendly yet well-regulated environment attracting investment and innovation from entrepreneurs who were deterred by legal uncertainty.

• Bitpanda secured a MiCA license in Germany, enabling it to offer regulated services like trading and custody of crypto assets.
• Boerse Stuttgart Digital became the first German entity to secure a MiCA license, allowing it to offer crypto services within a regulated framework.
• Binance, headquartered in EU Member Malta, is delisting non-MiCA-compliant stablecoins in the European Economic Area to comply. While this might seem like a negative impact, it shows Binance’s efforts to align with regulatory standards, which could enhance investor trust. Binance is yet to obtain a MiCA license.
• Crypto.com obtained approval to operate under MiCA’s licensing framework across multiple EU member states.
• OKX received pre-authorisation under MiCA, preparing for fully regulated operations within the EU. 
• KDSwap aims to become a MiCA-compliant DEX in Europe, working with Kadena. 

Concrete Benefits for Entrepreneurs and SMEs

MiCA has had tangible benefits for European businesses, particularly startups and small-to-medium enterprises (SMEs) looking to integrate crypto services. 

Lower Costs for Cross-Border Transactions: With crypto payments now regulated under MiCA, businesses operating in multiple EU countries can accept stablecoins for cross-border transactions at lower fees than traditional banking methods. This has boosted international trade, especially for e-commerce and import-export businesses.

Manage Treasury Operations More Effectively: Stablecoins allow businesses to store cash reserves digitally, particularly in jurisdictions where local fiat currencies are volatile or banking services are inefficient.

Accept Crypto Payments Through Regulated Payment Gateways: With MiCA ensuring security and compliance in crypto transactions, businesses can integrate crypto payments through established providers. Providers can convert crypto payments into fiat currency instantly, reducing exposure to volatility, lower transaction costs compared to credit cards and SWIFT payments and offering fraud protection through blockchain’s transparent, immutable ledger.

Faster Licensing and Expansion: Under MiCA’s passporting system, a crypto business that registers in one EU country can legally operate across all 27 member states without needing separate licenses. This has streamlined market entry for fintech firms, significantly reducing compliance costs.

Easier Access to Capital Through Tokenisation: MiCA has provided a legal framework for tokenised assets, allowing European startups to issue digital shares (security tokens) to raise funds from global investors. As a result, entrepreneurs have seen faster, more cost-efficient fundraising rounds, cutting reliance on traditional venture capital.

Increased Consumer Trust and Adoption: By enforcing strict security and anti-fraud measures, MiCA has helped legitimise crypto payments for everyday use. Small businesses can now accept crypto payments with greater confidence, knowing they are protected under EU law.

Strengthened Cybersecurity Requirements: MiCA’s cybersecurity provisions have forced exchanges and wallet providers to adopt stricter risk management frameworks, reducing the risk of hacking and fraud. This has led to a decline in major exchange collapses, providing a safer environment for crypto businesses.

The Global Crypto Race Gathers Pace

With both Europe and the U.S. now embracing crypto in their own ways, the global financial landscape is certainly shifting. The EU’s clear regulatory framework currently provides relative security and stability, while the U.S.’s recent pivot focuses on maintaining financial dominance and attracting innovation and promises a set of clear and more relaxed regulations.

Europe is likely to drive cryptocurrency’s mainstream adoption through an environment of legitimacy, so I believe MiCA’s advantage will not fade as it allows cryptocurrencies, especially stablecoins, to become more instrumental in finance in the EU area. Fintechs and SMEs in Europe and beyond have a good opportunity to integrate cryptocurrency into their business models safely and conveniently. The businesses that adapt early will gain a competitive edge, benefiting from lower costs, greater efficiency, and access to a global customer base. As regulations evolve, embracing crypto strategically—especially through stablecoins—will be key to long-term success. 

The next few years will determine which regulatory approach fosters the strongest, most sustainable crypto ecosystem. One thing is certain: crypto is no longer a fringe experiment, it’s a permanent fixture of the financial world.

Ekmel Cilingir
Chairperson of the Board of Directors, EMBank