Regulation of Crypto in the EU: Better Oversight Will Attract New Money

Regulation will attract more conservative investors into the crypto space and help them become more confident in investing in novel technologies, says Daniele Casamassima, the CEO of Pure.

Crypto regulation has been at the forefront of discussions amongst global financial watchdogs in the wake of the conflict unfolding in Ukraine. As Russia’s military offensive pushes for wide-ranging financial sanctions on the country, regulatory bodies across the world are devising ways to make sure the Russian government and blacklisted citizens can’t avoid sanctions by using digital currencies. 

This is hardly the first time this topic arises: the ongoing conflict has just added to the long list of global events calling on regulators to bring rules to the crypto space. Given that the cryptocurrency ecosystem has reached $2 trillion in market cap, digital currencies are at the start of their mainstream adoption phase – and, as a result, lawmakers will be shying away from the discourse around regulations much longer.

EU: Rugged Regulatory Landscape 

By 2022, almost every country has formed a certain attitude to crypto regulation, which varies by a whole mile. For one, Kosovo has banned crypto mining altogether, while North Macedonia set the course, banning all forms of crypto-related activities. Austria and Italy, in their turn, don’t regulate crypto in any way; Germany and Estonia each have their own regulations that are valid only within the country.

Of course, this sets the high bar for crypto projects who want to remain fully compliant throughout the region. I’ll give you an example of how it works. At Pure, we have a German asset manager, use German and UK payment solutions, and Estonian crypto exchange. To remain controlled, we have to undergo constant regulator checks to make sure that we are operating correctly, that the clients’ funds are safe. It requires transaction monitoring, communicating with lawyers and regulators, and so on. 

Regulation: Silver Lining

As the results of the voting against the EU-wide ban of Proof-of-Work (PoW) crypto has shown, the majority of European nations seem to be in favor of crypto survival. Still, they recognize that financial innovation has to be supported giving access to the frail parts of the technology to bad actors. 

Regulations are good for the space, and forward-thinking startups align with this notion. The digital currency ecosystem and the innovation it heralds speaks for itself, and it’s vitally important that the industry is given the chance to thrive. The reality is that for the digital currency ecosystem to truly attain its limelight, thoughtful regulations must be put in place – and most nations are billed to embrace them. 

Setting the rules on how the crypto industry should function will help place additional care in product design, implementation, and delivery so that investors and users can get the best value with minimal risk exposures. I believe that introducing regulations will help facilitate this transition. 

Crypto Regulation: Paving Way to Adoption

By all of the available metrics, the trading figures of the crypto industry, though impressive, still pale in comparison with the mainstream banking or broader financial industry. Sound regulations will attract new money into the space and foster the broader ecosystem growth, as more conservative investors become more confident in investing in novel technologies.

However, I expect that by 2023 we will have unified regulations, which will be applied to all EU countries – the same as how Forex and trading licensing now works. If one complies with regulations in one EU country (for example, Estonia), you can be sure it will work across the region. For the moment, there aren’t many companies dealing with crypto with the same amount of control, because making it all work together requires plenty of resources. As unified regulations are introduced, the problem will be solved.  

When the regulations are put into place, the inflow of capital will increase. There will be less incidence of money laundering and bad actors, which is, in its turn, billed to drive the mass adoption of digital assets.

About the author

Daniele Casamassima is the CEO of Pure. He has had a career in finance for more than 15 years. Now he is building the new ecosystem that will bring banking, crypto, trading, and investment services in one app.

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