This article has been published in Investment & Pensions Europe (IPE).
In September 2020, the European Commission published its Digital Finance Package, which included the DLT Pilot Regime and MiCA (Markets in Crypto Assets). This shiny new bit of legislation would usher in a new era of innovation and digital transformation in Europe’s financial markets while safeguarding financial stability and investor protection.
Like many jurisdictions around the world, the DLT Pilot Regime (DLT PR) introduced a regulatory sandbox with the ability to test DLT-based issuance, trading and settlement in a controlled environment with the benefit of key regulatory relief and exemptions. Alongside DLT PR, MiCA introduced the blueprint for regulating crypto-assets, including e-money tokens or stablecoins.
Interestingly, at the same time, in the US where there was no single rulebook on digital assets, and only regulation by enforcement, some of the firms we have now come to consider as market leaders, were investing and expanding their market share. When a very crypto-friendly new US administration came to power in January 2025, we started to see in the US also, a proliferation of rules and regulations to support a DLT-based financial ecosystem. In July 2025, the White House published a paper entitled ‘Strengthening American Leadership in Digital Financial Technology’ chartering a new course for US financial markets.
This first paper and the legislative proposals that came after it (Genius Act, Clarity Act), were unequivocal on certain points: the Administration supported a pro-innovation, technology-neutral framework that protected individual rights — including self-custody, access to public blockchains, a wholesale rejection of wholesale central bank digital currency on the grounds of the risks it posed to privacy and individual rights, and a conscious policy promoting the global dominance of the U.S. dollar through dollar-backed stablecoins.
The very deliberate and pro-digital policy of the US administration also had the added advantage of forcing two major regulatory agencies (the SEC and CFTC), often at war with each other, to collaborate and put aside their turf wars. The result? A barrage of rulemaking by both agencies, clarifying everything from eligible assets for collateral to tokenising securities at CSD or trading platform level.
Not everything, however, is smooth sailing on the US side. The US Clarity Act, which looks at the regulation of market infrastructure hit the skids earlier this year. One of the main blocking points is disagreement over stablecoins rewards on trading platforms (or yield). Traditional banks strongly oppose allowing crypto platforms to pay passive rewards simply for holding stablecoins, fearing it would cause deposit outflows from regulated banks into unregulated crypto accounts, while major crypto-trading platforms argue that restricting such rewards would undermine user incentives, platform growth, and the competitive edge of digital asset services.
What, you might then ask is happening in Europe, since the early mover advantage of DLT PR and MiCA? Well at least one thing to be smug about: the US GENIUS Act is close to being a copy paste of our MiCA rules on stablecoins with similar rules on licensing/authorisation of issuers, reserve backing with high quality assets and consumer protection safeguards with the ability to redeem stablecoins at par.
The picture is less rosy when we look at other measures. For instance, let’s look at stablecoins: US-issued and USD-denominated stablecoins overwhelmingly dominate the global market for stablecoins.
As of early 2026, the total stablecoin market cap stood around $310 billion, with USD-pegged stablecoins accounting for approximately 99% of supply. In contrast, EURO-denominated stablecoins total only about $1.06 billion (roughly 0.35% of the market), with even their trading volumes representing a tiny fraction of USD activity.
Let’s look at other measures of a growing digital asset-based economy.
According to RWA.xyz data, the global on-chain market for real world assets (Treasuries, private credit, funds, commodities) has reached $24–26 billion, with tokenized US Treasuries alone accounting for $9–11 billion (the single largest category). The comparable figure in the EU stands around the low hundreds of millions.
Looking at financial instruments investing in crypto-assets, US spot Bitcoin ETFs alone hold $87 billion in AUM. Total US-listed crypto ETPs/digital-asset treasuries exceed $180–220 billion. By contrast, the entire EU crypto ETP market sits at roughly $12.5 billion AuM.
Most observers agree that at this point, to avoid opening a structural gap with the US, we need speed and vision and an urgent reboot of the regulatory framework in Europe. Some leading national authorities are already doing a spectacular job, guiding the market and building on already robust foundations. We think here of Luxembourg’s Blockchain Law, the German Electronics Act, Italy’s Fintech Decree and so on. Recent clarifications by the CSSF that UCITS funds were permitted to hold stablecoins for settlement purposes, or to indirectly invest up to 10% of their net asset value in crypto-assets, were hugely welcomed by the market.
At European level, the Market Integration Package (MIP) currently under review, re-opens DLT PR, MiCA as well as traditional financial frameworks like CSDR and the Settlement Finality Directive. To the extent that the package provides legal certainty and a signal that Europe is open for business, the DLT part of the package should be adopted in an expedited manner. That is as far as the legislators and regulators can probably go in promoting innovation. For the rest, we hope to continue to see traditional financial firms and fintechs in Europe commit, and pivot to, DLT with all the financial risk-taking and rewards that this implies.
Author: Susan Yavari, Deputy Director, Capital Markets and Digital at EFAMA
