The European Union faces increasing concerns about losing its edge in the global crypto race as more agile jurisdictions begin to pull ahead.
Risks of EU Falling Behind in Crypto Regulation
Speaking at the DigiAssets Conference 2025, Catriona Kellas, International Legal Lead for Digital Projects, raised the alarm about the risks of the EU falling behind in digital asset regulation. "There is a real risk with this technology that jurisdictions which were perhaps at the very forefront a few years ago—it's so easy to fall behind," she stated. Kellas emphasized that US momentum and Asia-Pacific's flexible frameworks are pressuring the EU, which is still locked in slower legislative cycles.
Focus on EU's Digital Ledger Technology
Kellas highlighted the importance of the EU's Digital Ledger Technology (DLT) Pilot Regime, which has been in effect for only a few years. She acknowledged EU regulators are actively working to revise and optimize the system but said more needs to be done to keep pace. The DLT Pilot Regime allows for the issuance, recording, transfer, and storage of tokenized financial instruments on dedicated blockchain infrastructures. Kellas noted that the EU is at least "asking the right questions," especially around MiCA 2, the potential update to its flagship crypto framework.
EU's Actions in 2025
Despite growing criticism, the EU has made notable progress this year: * Introducing stricter environmental regulations for crypto operations to reduce carbon emissions. * Implementing the Digital Operational Resilience Act (DORA) to strengthen IT and communication security across financial services. * Expanding cybersecurity measures for digital asset service providers. These steps signal a push toward sustainable and secure crypto integration—but experts argue they are not enough to keep pace with more nimble jurisdictions.
With the US and APAC advancing rapidly in crypto innovation and regulation, the EU must accelerate updates to MiCA, enhance its DLT infrastructure, and reduce legislative delays to stay competitive.
