The European Parliament is preparing to form a new European Commission, which will determine the European Union's crypto policy for the next five years.
Elections are taking place all over the world this year, and the European Union is no exception. In the autumn, the European Parliament will vote on a new European Commission, which will translate policy priorities into legislation.
The new commission won’t take office until November, so it’s too early to assess the impact of the 2024 composition on cryptocurrency policy. However, we can identify several trends that predict how the new legislators are likely to regulate the area.
Europe is moving to the right
The first trend is that Europe’s center of gravity is shifting to the right, which will impact businesses of all sizes. Taxation and approaches to innovation will be debated. France, in particular, will face challenges due to growing instability and an uncertain political future. Crypto companies should pay attention to these issues.
Parliament has shifted to the right, with centrist parties generally less inclined to intervene. However, crypto policy is generally not a partisan issue in Europe, so there will not necessarily be a pause in crypto regulation. Generally speaking, the centre-left Socialists and Greens are more sceptical than their centrist counterparts in the Renew (liberal) and European People's Party (conservative). Despite the rise of some far-right parties, the likelihood of MEPs from the political extremes actively influencing policy remains low. The centrists still have a stable majority.
The second trend is the desire of politicians to compete for influence in the area of innovation policy. During the next Commission term, crypto policy is likely to be driven more by individuals than by political parties. Some of the new MEPs will likely want to make a name for themselves by specialising in this new policy area. We may also see influential senior political advisers jockeying for power within the Commission. It is worth noting that the Council Presidency roles also matter as countries seek to make their mark on EU digital policy. Denmark, for example, will hold the Presidency in the second half of 2025 and has an active regulator doing interesting work.
Key to the future of cryptocurrencies will be the people who replace centrist commissioners Mairead McGuinness and Valdis Dombrovskis. At the parliamentary committee level, where the real work is done, the Economic and Monetary Affairs policy will remain the most relevant and influential committee for cryptocurrencies and digital assets. There is a lot of stability in the leadership here, with the socialist group retaining its role as chair, and many of the group coordinators remaining in their positions.
Innovation as a basis for policy
The third trend is a growing recognition that innovation will be at the core of policy in the next few years. Areas such as digital privacy and artificial intelligence have been identified as EU policy priorities. Expect a more decisive and proactive implementation by the Commission of the landmark laws adopted last term, notably the Digital Markets Act and the Digital Services Act, which set out comprehensive regimes for digital gatekeepers, including content moderation provisions for digital platforms.
From a market perspective, it is worth paying attention to the growth of institutional adoption of cryptocurrencies and distributed ledger technology. This is likely to trigger political intervention. It is unclear what EU regulatory barriers exist at this stage. But greater retail investor participation in cryptocurrencies through traditional finance is likely to trigger a political reaction.
But before the EU embarks on new policymaking, policymakers and politicians should heed a cautionary tale. The EU has done a lot in the last five years to provide global leadership on crypto policy. As others catch up, the EU would be wise to ensure that the rules it has already developed are properly implemented and “fit for purpose” before embarking on significant additional legislative work. That’s not to say there won’t be minor changes. But the EU should remember that moving too quickly in a globally competitive (and mobile) industry is risky. It would run counter to the EU’s goals and ambitions, forcing companies to move to other jurisdictions rather than raising the regulatory bar for everyone.
European leaders are keen to boost competitiveness, and redoubling efforts to create an innovation-friendly system for digital assets will certainly help attract the jobs and growth that Europe so desperately needs.