The European Union’s election in June may see a new set of lawmakers taking over crypto issues.
The architects behind the EU’s landmark Markets in Crypto Assets legislation may return, but industry participants still hope for a more progressive assortment.
The European Union’s more than 370 million eligible voters are set to elect 720 parliamentarians this June – and while tech policy focus has shifted to artificial intelligence (AI), blockchain industry bodies are vying to prove the technology is vital to the bloc’s digitization efforts.
The EU has already established the world’s first comprehensive crypto rules alongside strict anti-money laundering measures for the sector. But with revisions to the landmark Markets in Crypto Assets (MiCA) regulation likely in the works and the legislation’s two key architects’ political futures up in the air, Europe’s crypto industry is bracing itself for change.
Change could mean a number of things, including the industry potentially losing the handful of lawmakers who really know crypto or a slackening of new policymaking. More challenging still is getting ahead of shaping the sector’s new role in a discourse centered on artificial intelligence (AI) – something the EU has already started legislating.
Earlier this year, four leading EU industry groups joined forces to pen a manifesto pledging to promote the use of blockchain tech in the bloc to avoid falling behind “in the global race” towards a digital economy.
The groups say the timing for the manifesto is “crucial considering the upcoming elections and political changes Europe will undergo” this year and makes a case for continuing work on blockchain.
“While we recognize the intrinsic value of technologies like artificial intelligence, virtual reality and robotics, we believe that blockchain will serve as the trust layer for the convergence of all these technologies, allowing them to build upon each other and form the framework of the future digital economy,” the manifesto said.
Young blood
The associations’ hope is that a new and hopefully younger parliament will be easier to approach than the last – at least where digitization is concerned.
For crypto and blockchain policy in particular, political parties may matter less than lawmakers’ age, according to Robert Kopitsch, secretary general of Blockchain for Europe, one of the four industry associations that collaborated on the manifesto.
“If you have a wallet full of crypto, you’re much more open to the idea that this will be part of the future economy, right? Because you have it, you know how it works, you understand it,” Kopitsch said during an interview with CoinDesk.
Marina Markezic, co-founder of the European Crypto Initiative (EUCI), which also collaborated on the manifesto, says younger politicians are likely to be more tech-savvy as well.
“So it would be, like, kind of also easier to explain, to talk to them” about blockchain technology, Markezic said.
But first, things overall might potentially slow down, according to Benedikt Faupel at German digital industry association Bitkom, “just because we don’t know how the elections play out.”
MiCA architect up for re-election
Crypto policy in the European Parliament (EP) didn’t have a lot of support to begin with and was spearheaded by “mostly three or four people,” Markezic said.
Kopitsch and Markezic agree that Greek politician and former EP Vice President Eva Kaili was crypto’s driving force in government. Kaili’s dismissal from Parliament over a high-profile corruption scandal was seen as a blow to policy efforts, but thanks to German lawmaker Stefan Berger, MiCA made it through to the end of the line.
Berger, who was the rapporteur for the package and in charge of handling the framework through negotiations, helped stamp an effort by the EP’s Green politicians to limit the use of the energy-intensive proof-of-work consensus mechanism that would have effectively banned Bitcoin in the union.
“He did so much,” said Markezic, referring to Berger’s work on MiCA.
Berger is currently rapporteur for the EU’s legislative proposals for a digital euro but is also up for re-election this June. According to Jonas Gross, head of the Digital Euro Association, the outcomes of an election of this scale are tough to predict, and it’s “infeasible to discuss specific officials who might not be back this year.”
“We do see that the European Parliament is currently – under the guidance of Stefan Berger – following a very innovative and open-minded approach when it comes to crypto assets, stablecoins and the digital euro,” Gross added. “It would be desirable to get a Parliament in place that has a similar innovative focus to bring these digital money-related topics further forward so that it benefits the EU.”
Another architect of MiCA whose future is up in the air is Mairead McGuinness, who serves as the commissioner for financial stability. MiCA was proposed by the European Commission under McGuinness’ purview. She has said she won’t be contesting in the 2024 parliamentary elections but is open to staying on another term as Commissioner – though that decision ultimately rests with the EU’s overarching government.
Digital euro
With MiCA mostly out of the way, another key framework for some crypto watchers is the EU’s push for a central bank digital currency, which is stoking controversy – and even conspiracy theories – with some politicians raising concerns that a digital euro could give the EU governments too much power and access to private information.
According to Anne-Sophie Gógl, manager at KPMG Germany and executive board member of the Digital Euro Association, some right-wing political parties are using plans for a digital euro to “create a mood against the European Union.”
“They are using words such as control and surveillance. They also accuse the digital euro of excluding marginalized groups,” Gógl said in a written statement. “We fear that this trend will also have an impact in Europe after the elections: a larger proportion of right-wing populist representatives in the EP and therefore the risk that the topic of the digital euro will be misused for misinformation.”
Polls are projecting rising support for the far right, but likely not enough to tip the scales in favor of anti-EU sentiment this election.
If these parties do snag a nice chunk of new seats though, it could “massively slow down the policymaking process” for a digital euro, Gógl said.
Positioning blockchain in AI
The EU’s tech policy priorities have shifted away from crypto to focus on AI, and the crypto industry is pushing for the application of blockchain technology in conjunction with AI, according to Anja Blaj, policy expert at EUCI.
“What we are arguing most of the time is that AI alone raises a lot of fears as well, and how those fears can be quite often addressed is through blockchain technology,” Blaj said, referring to arguments that blockchain could be used to help preserve the integrity of data fed to AI systems and decentralize them.
This won’t be the first time industry bodies pushed for the acceptance of blockchain technology over the adoption of speculative assets. During the last bear market, which saw several crypto giants fall, the industry quickly pivoted to promoting blockchain applications in traditional finance and other areas at events such as the World Economic Forum.
“What people are actually moving away from is the financial connotation of the blockchain industry. So quite often, we actually push for the narrative of focusing on the ReFi of regenerative finance… supply chains or how, for example, data can be handled,” Blaj said during an interview with CoinDesk.
Regenerative Finance (ReFi) sees cryptocurrency projects investing in sustainability in an effort to fix some of the problems markets create.
Setting up blockchain as something vital to the digitization of Europe may prove critical to the industry’s survival in the region.
When the current government was formed, “there was a lot of hype around blockchain,” and Europe was the first to get moving on policy and initiatives, Markezic said.
“Now it is more on AI and… why would you use your political power in order to talk about something that might not be that present anymore?” Markezic said of the risk of fading political interest in blockchain.
The elections will take place from June 6 to 9.
