EU elections could hint at future direction for crypto regulations, Bitfinex analyst says
Quick Take
- Next week’s EU parliamentary elections represent a regulatory wildcard for the cryptocurrency sector, with the potential for crackdowns or supportive motions depending on voting outcomes, an analyst said.
- European bitcoin exchange traded products (ETPs) have seen significant outflows totaling $506 million this year, despite the approval of spot bitcoin ETFs in the US, according to a report.
The European Union Parliamentary Elections, taking place next week, could provide further clues on how crypto will be regulated in that market, according to Bitfinex Head of Derivatives Jag Kooner.
"A right-wing shift could lead to stricter crypto controls, while a pro-crypto outcome might accelerate supportive regulations like MiCA," Kooner told The Block.
The Bitfinex analyst said that investors will be watching the EU elections for regulatory clues, which could significantly impact the broader crypto market in June and the following months.
Impact on implementation of MICA framework
Kooner noted that the upcoming EU elections are crucial for shaping the bloc's legislation, particularly the implementation of the Markets in Crypto Assets (MICA) framework. He added that any possible outcome that strengthens populist parties could in turn impact regulatory stances, potentially resulting in either stricter controls or more supportive policies, depending on the new parliament's makeup.
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"The upcoming elections are crucial for the implementation of the MiCA regulation. MiCA aims to create a unified regulatory framework for cryptocurrencies across the EU, providing legal clarity and potentially attracting more investment. The outcome of the elections will determine the pace and enthusiasm with which these regulations are implemented," Kooner added.
The 2024 European Parliament election is scheduled to take place from June 6 to June 9. This will be the tenth parliamentary election since the first direct elections in 1979 and the first European Parliament election since Brexit. Additionally, this election will coincide with several other elections in various EU member states.
European ETPs suffer monthly outflows
One indicator that demonstrates the appetite for crypto assets within the bloc is the flow dynamics of bitcoin exchange-traded products (ETPs). According to the Financial Times, Morningstar data shows that European bitcoin ETPs have experienced outflows every month this year.
The FT report added that bitcoin ETPs domiciled in Europe have experienced outflows totaling $506 million since the beginning of the year. However, the price of bitcoin has increased by approximately 40% during this period, bolstered by inflows into U.S.-based spot bitcoin exchange-traded funds (ETFs).
Bitcoin ETPs in Europe managed assets of around $6.4 billion at the end of April. In contrast to this, U.S. funds had assets totaling $53.5 billion in the same month, the report said.
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