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Home » Features » US and EU travelling different roads on crypto regulation

The US Supreme Court’s decision in West Virginia v. EPA may have implications for the crypto industry, says Sheila Warren, former lawyer and now CEO of the Crypto Council for Innovation. Now, if the Court’s majority disagrees with a regulation, it can essentially veto that regulation.

The Supreme Court struck down a never-executed centrepiece of the Obama administration’s climate policy, namely the Clean Power Plan, which was a set of rules governing fossil-fuel-fired electric generators. Chief Justice John Roberts, writing for a 6-3 majority, announced in no uncertain terms that the basis for the Court’s decision was the “Major Questions Doctrine” (MQD) — a phrase no Supreme Court majority had previously invoked explicitly.

This is a new and unprecedented development that sees one branch of government giving itself a huge amount of power and reducing the potential effectiveness of federal agencies.

“Given the unresolved nature of these questions, some scholars see the MQD as basically an empty vessel, to be filled up opportunistically with judges’ own preferences,” noted Philip A. Wallach, a Senior Fellow with the American Enterprise Institute. “In their telling, conservative justices are opposed to ambitious regulatory actions even when Congress has clearly authorised them, and the MQD gives them an excuse to make themselves into a veto point in the policymaking process even where nothing about their competence as judges makes them suited for the role.”

How is this going to affect the cryptocurrency industry?

This could have direct implications for the crypto industry. The role and firepower of regulators, like the SEC, may be in question if the Court has the ability to step in. This can cut both ways, and also paves the way for the possibility of complicated state-level regimes that could be challenging to navigate and serve as significant barriers to entry.

“What the recent MiCA regulation in the EU shows us is that engagement across the political spectrum can be collaborative and technology neutral,” explained Sheila Warren, CEO of the Crypto Council for Innovation. “The private sector played a supportive role lending technological expertise – something vital for the development of inclusive and transparent regulation. Crypto is nonpartisan, secular, and important for all, regardless of political persuasion.”

In the EU, leaders sceptical of crypto were open to listening and learning, as long as the approach was collaborative and humble. “We also saw the importance of an emphasis on tech neutrality,” Warren added. “Regulation of any underlying technology itself risks anointing winners that may or may not be the optimal choice for constituents.”

MiCA represents a sensible coalition approach

MiCA (Markets in Crypto-Assets) is a landmark deal and has been a long time coming. It represents a provisional agreement by the EU Council and parliament on regulation of crypto-assets, stablecoins and trading venues. It is designed to protect investors and preserve financial stability. In Warren’s view the outcome reflects a sensible coalition approach and provides clarity in critical areas. It also, for the most part, avoids stifling innovation that will benefit some 450 million people across 27 countries. MiCA is designed to bring more clarity and supplement regulations on crypto-assets which have already been introduced by some EU member states.

“I am proud that the Crypto Council’s efforts helped shape this guidance, which generally reflects a nuanced understanding of the issues it addresses,” she said. “It follows years of education and conversation. Legal and regulatory certainty for the market will enable more crypto firms to invest and innovate across the region. It is an encouraging development.”

This framework has helped put the European region on the map as an early and important leader in defining the regulatory environment. It has the potential to shape the digital asset ecosystem for years to come.

“We congratulate those involved with this landmark negotiation and look forward to future collaboration with policymakers and regulators as implementation discussions begin,” Warren said.

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This article is not investment advice. Investors should do their own research or consult a professional advisor.

Stuart Fieldhouse Editor

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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