European Legislation on Cryptocurrency: A Leap Forward or Bank Lobby Win?

Stylized image of European Parliament building under a setting sun that signifies the epoch of transition, earthy tones of brown and grey symbolizing traditional banking system, architectural embellishments reflecting the complex legislation, vibrant digital currencies, like Bitcoin, buoyantly floating around, created in an Impressionistic style portraying ambiguity around the move, subtly contrasted with an uphill path representing the struggles of retail investors. The overall mood is a blend of anticipation and uncertainty.

Earlier this year, the European Parliament presented a bill that gave the nod to its member banks to hold up to two percent of their capital in digital currencies, such as Bitcoin or any of its top competitors. This legislative action, set to take effect in January 2025, appears to represent the evolving nature of the global cryptocurrency regulation, opening the door for banking institutions to amass cryptocurrencies. Nevertheless, Stefan Rust, former CEO of and now steering the helm at Truflation, advocates a contrary viewpoint.

The former executive highlights the significant role of cryptocurrency, especially Bitcoin, as originally conceived as a response to the institutional failure that precipitated the 2008 recession. It was ordained to empower everyday people, rather than the colossus that financial institutions have become. However, Rust suggests this newly passed bill in Europe doesn’t necessarily advance this original goal.

He affirms that this legal adjustment will serve financial institutions significantly more than the common investor. Primarily, the imbalance in capital access tilts the playing field in favor of establishments, especially exchange-traded fund (ETF) managers who require digital currencies like Bitcoin for asset backing. The necessary capital for buying underlying assets and finding a custodian could be an uphill battle for your average retail investor, leading to difficulties in ownership of a single coin.

Rust perceives the launch of the Jacobi FT Wilshere Bitcoin ETF on the Euronext Amsterdam exchange as a more favorable development. Nevertheless, he insists that broader regulatory approvals across the globe are required for cryptocurrencies to reach a larger audience and maintain their inherent philosophy as democratic, decentralized assets.

In other progressive news, Coinbase has recently received the green light to sell cryptocurrency futures, with an Ethereum futures ETF approval anticipated by the year’s close. However, these developments were arguably greeted with unanticipated tepidity in the markets. Investor response has been lukewarm at best, hinting at a possible misalignment between regulatory progress and market reception.

Rust proffers a closing thought; a global acceptance of cryptocurrency regulations is an encouraging development. Nonetheless, the focus should shift toward creating more opportunities for retail investors, rather than increasing access for banks, to truly ignite the next wave of the cryptocurrency revolution.

Source: Cryptonews

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