European Union banking regulations have provided a significant competitive advantage for crypto firms compared to the challenges faced by their U.S. counterparts, according to an analysis by Patrick Hansen, senior director of EU strategy and policy at Circle.
Circle Exec: Regulatory Clarity Helps Europe Surpass U.S. in Crypto-Friendly Banks
According to Hansen’s report, he highlights the EU’s 20-year effort to foster innovation and competition through clear legal frameworks, benefiting fintech and cryptocurrency sectors. Hansen attributes Europe’s crypto-friendly banking environment to the EU’s long-standing regulatory initiatives. These include the E-Money Directive (EMD), introduced in 2000, and the Payment Services Directive (PSD) from 2007.
Both frameworks, he explains in the report, were designed to ensure fair competition and avoid stifling technological innovation. For instance, PSD2 mandates banks to provide non-discriminatory access to payment accounts for non-bank payment service providers (PSPs), fostering innovation across the financial sector.
The recently enacted Instant Payments Regulation (IPR) and the proposed Payment Services Directive 3 (PSD3) further expand access for non-bank PSPs to central bank payment systems, including initiatives to safeguard consumer funds. Hansen states:
Starting next year, I predict we will see several non-bank PSPs, including stablecoin issuers, settling SEPA payments directly through their respective central bank.
In contrast, U.S. crypto firms face regulatory uncertainty and limited banking access, a scenario Hansen describes as part of “Operation Chokepoint 2.0.” Unlike the EU, the U.S. lacks a unified federal framework for payments and crypto services, leaving regulation fragmented across states. This has led to a disparity, as “Europe boasts the highest number of crypto-friendly banks in the world—55 compared to 23 in North America, according to Coincub,” Hansen’s analysis adds.
Hansen’s perspective highlights how the EU’s coordinated regulatory approach has bolstered the region’s fintech and crypto sectors, providing essential banking infrastructure and legal clarity. While Hansen acknowledges overregulation risks, he emphasizes the EU’s success in crafting policies that encourage competition and innovation in financial services. This regulatory foresight, Hansen concludes, makes Europe a global leader in fostering a supportive environment for crypto and fintech firms.
