US-EU Regulatory Divergence in Crypto-Assets: The Strategic Implications of the GENIUS Act and MiCAR Framework

In the process of defining regulatory frameworks for crypto-asset markets, the United States and the European Union are emerging as the two main regulatory poles, each with a structurally different approach in the regulation in terms of objects (classification of digital assets), activities and services, as well as behavioural, organisational and prudential requirements. 

On the one hand, in 2023, the European Union adopted the Regulation on Markets in Crypto-Assets (MiCAR, Regulation (EU) 2023/1114), which establishes a harmonised legal framework designed to ensure market stability and investor protection within the European Union by comprehensively regulating the issuer requirements for some types of crypto-assets, public offering, admission to trading on a trading platform and provision of services related to crypto-assets that, inter alia, do not qualify as financial instruments, insurance contracts, or bank deposits.

On the other hand, in July 2025, the United States took a decisive step towards formalising its own regulatory model through two major initiatives: the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), which became law on 18 July 2025, introducing a modular and progressive regime for stablecoins, and the report of the Presidential Working Group of 30 July 2025, Strengthening American Leadership in Digital Financial Technology, which sets out a comprehensive strategy to promote the responsible development of digital assets and blockchain/DLT-based infrastructure through 'rapid onshoring' and 'competitive acquisition' policies. A key articulation of this strategy was provided by SEC Chairman Paul S. Atkins, who clarified the policy design of the reforms in a speech on 31 July 2025. In this presentation, he outlined how the US strategy, summarised under the label 'Project Crypto', aims to internalise crypto-asset activities, accelerate innovation and position the country competitively, balancing risks – including for the traditional financial sector – through selective eligibility, transparency and supervision mechanism. 

The coexistence of two regulatory architectures – the European model, based on harmonised ex ante regulation, and the US one, geared towards a modular and adaptive approach – reflects fundamentally divergent legal philosophies and political priorities. More critically, it forces industry players to navigate regulatory trajectories that are not structurally harmonised, requiring strategic adaptation across both frameworks – despite crypto markets being inherently designed for a global market. This article provides a structured policy comparison between the US and European regulatory models, outlining key points of convergence and divergence and their operational implications for operators active in the crypto-assets and DLT infrastructure.

Comparative Topic-Level Analysis of U.S. and EU Regulatory Frameworks for Crypto-Assets Classification and Legal Status of Crypto-Assets

The US framework outlined by "Project Crypto" introduces a "modular categorisation" model designed to adapt dynamically to the functional nature of crypto-assets. The Presidential Working Group has proposed a taxonomy that distinguishes between collectable digital assets, commodities, stablecoins and securities. This avoids predefined approaches that assume, in the absence of further analysis, that tokens are considered securities. This approach aims to restore the SEC's interpretative agility, encouraging the domestic issuance of crypto-assets and reducing regulatory pressure through tools such as 'purpose-appropriate exemptions' and 'safe harbours', which promote innovation while reducing legal uncertainty. In contrast, MiCAR introduces a codified taxonomy which, in Articles 2 and 3, distinguishes three main categories of crypto-assets: electronic money tokens (EMTs), asset-referenced tokens (ARTs) and other crypto-assets. The European approach is based on the principle of substance over form and consistency between classifications to eliminate ambiguity and ensure uniform application of the regulatory framework and reduce interpretative ambiguity. In this framework, the categories are closely linked to the underlying risks and determine ex ante the applicable regulatory regime, in accordance with the principles of 'same assets, same risks, same rules' and 'technological neutrality'. The conceptual divergence between modular categorisation (US) and codified taxonomy (EU) of tokens (crypto-assets) has immediate operational implications. For example, a token classified as a 'payment stablecoin' under the GENIUS Act framework would, if it were to be classified as an 'asset-referenced token' (ART) under MiCAR's taxonomy, be prohibited from public offering within the European Union. Article 16(1) requires that ART issuers be "established in the Union" and authorised by their home Member State competent authorities, creating challenges for such issuers to overcome this jurisdictional barrier for non-EU payment stablecoin issuers. Non-EU crypto-assets with functionally similar characteristics to an ART can only access EU markets through alternative pathways. Such tokens may be offered to EU qualified investors under an exemption or included in professional portfolio management services by EU-authorised intermediaries. 

This framework enables legitimate cross-border operations but creates structural divergence: economically equivalent products are classified differently depending on issuer jurisdiction. Operators therefore need compliance strategies that reflect these jurisdiction-based distinctions in regulatory treatment of functionally equivalent products. Put simply, compliance must be tailored to each jurisdiction rather than assuming one classification will apply globally.

Issuance, distribution and capital formation

 US policy aims to simplify issuance by removing what the Presidential Working Group calls "regulatory stigma," particularly with regard to the status of securities. The framework offers flexible exemptions for initial coin offerings (ICOs), airdrops and network rewards, allowing for fit-for-purpose disclosure regimes that reduce barriers to entry for projects targeting the domestic market. The SEC is considering both tailored registration regimes and safe harbours appropriately conditioned by securities' registration for transactions involving digital assets that may be subject to investment contracts. MiCAR, by contrast, imposes standardised white papers for public offerings, with supervisory authorities authorised to request revisions or suspend distributions in case of doubts about the adequacy of the disclosure. Trust is embedded as a precondition through comprehensive disclosure requirements that must be "fair, clear and not misleading." The EU regulation requires detailed information in eight categories, including information on the issuer, token characteristics, underlying technology, risks and environmental impact. This divergence reflects a broader philosophical divide: the US seeks to accelerate market entry through flexible disclosure, while the EU is investing heavily in upstream transparency to build investor confidence from the outset.

Stablecoins: GENIUS Act vs. MiCAR's ART/EMT framework

 The GENIUS Act defines a controlled ecosystem for "payment stablecoins," limited to permitted qualified issuers as: (i) subsidiaries of insured depository institutions, (ii) Federal qualified payment stablecoin issuers, or (iii) State qualified payment stablecoin issuers. The US regulatory framework requires full 1:1 reserve backing with high-quality liquid assets, monthly disclosure of reserves, and strict redemption obligations, with severe enforcement mechanisms for unauthorised issuance. Payment stablecoins issued by authorised issuers under the GENIUS Act are explicitly excluded from being treated as securities or commodities under federal law. The GENIUS Act provides an exhaustive list of permitted reserve assets, explicitly prohibiting rehypothecation except for limited margin obligations and custodial services.

MiCAR establishes a dual framework for stablecoins, distinguishing between e-money tokens (EMT)^[1] and asset-referenced tokens (ART). Electronic money tokens must refer to a single official currency and provide unconditional redemption rights at any time and at par value. Their issuance is restricted to credit institutions or electronic money institutions. At least 30 % of the funds received for the issuance of an EMT must be deposited in separate accounts in credit institutions. The remaining funds may be invested in secure, low-risk assets that qualify as highly liquid financial instruments with minimal market risk, credit risk and concentration risk and are denominated in the same official currency as the one referenced by the EMT. Asset-referenced tokens, on the other hand, are crypto-assets that stabilise their value by referencing one or several assets, which may include official currencies (including non-EU currencies), commodities, or baskets of multiple assets. They must be issued by an EU-established and authorised legal entity, either under Article 21 (dedicated authorisation) or Article 17 (credit institutions). ARTs are subject to robust requirements, including own-funds, reserve composition and segregation, liquidity management, and redemption rights, due to the risks arising from their potential widespread adoption as value transfer mechanisms. Issuers of “significant” tokens are subject to even more stringent requirements, including higher capital requirements, interoperability obligations and enhanced liquidity management policies, and direct supervision by the European Banking Authority.

Practical example: Consider a company seeking to issue a USD-pegged stablecoin in both the United States and the European Union. An issuer launching a USD-pegged stablecoin in the United States under the GENIUS Act operates within a relatively flexible framework: broader reserve-composition options; multiple issuer-eligibility pathways (including ‘permitted’ nonbank entities); monthly CEO/CFO certifications rather than comprehensive ongoing reporting; and fee redemption subject to disclosure.

By contrast, an economically equivalent USD-referencing instrument issued in the EU would lead to treatment  as an e-money token (EMT) under MiCAR and face a more restrictive regime: stricter reserve segregation and composition requirements; issuer eligibility limited to credit institutions and e-money institutions; comprehensive ongoing reporting and stress-testing; mandatory fee-free redemption at par; and, for EU-established issuers, direct exposure to DORA obligations on ICT risk management, incident reporting, and contractual requirements for third-party ICT providers. Where an EMT is designated “significant,” additional liquidity and interoperability requirements apply.

The divergence is not merely nominal: it translates into material differences in compliance costs, operational requirements, and business-model constraints. To place economically equivalent USD-referencing instruments in both markets, issuers will require sophisticated cross-jurisdictional compliance strategies, covering product structuring, reserve and redemption policy design, governance, ICT controls and disclosure alignment.

See Tables 1 and 2, situated at the bottom of this article, for a structured comparison between the two regulatory models (Genius Act and MiCAR) on stablecoins.

Cross-Border Market Access: Conditional Reciprocity vs. Territorial Establishment

 The regulatory treatment of cross-border stablecoin issuance illustrates one of the most pronounced divergences between the U.S. and EU frameworks. The GENIUS Act establishes what can be characterised as a conditional access model, while MiCAR enshrines a territorial establishment model.

The U.S. conditional access framework

 The GENIUS Act permits foreign issuers of payment stablecoins to access U.S. markets without establishing local subsidiaries, provided they satisfy a structured four-pillar framework:

• Comparable regulation: operation under a foreign regime deemed comparable by the U.S. Treasury to GENIUS Act standards;
• U.S. Registration: registration with the Comptroller, with applications deemed approved within 30 days unless rejected;
• Reserve requirements: maintenance of sufficient reserves within U.S. financial institutions for domestic liquidity needs (unless waived under reciprocity);
• Jurisdictional compliance: incorporation in jurisdictions free from U.S. sanctions or serious AML/CFT concerns.

Treasury may also negotiate reciprocity arrangements with comparable foreign regimes, recognising functional equivalence rather than demanding identical regulation. The enforcement system combines prohibitions on non-compliant issuers with waiver authority for reasons of national security, financial stability, or other public interest objectives. Importantly, it also grants regulators the ability to rescind registrations for persistent non-compliance, underscoring the conditional nature of access.

The EU territorial establishment model 

By contrast, MiCAR requires direct incorporation and authorisation within the Union. Crypto-asset service providers must have a registered office in a Member State where they conduct substantive activities, their place of effective management in the Union, and at least one director resident in the EU.

For e-money tokens, only credit institutions or electronic money institutions authorised under EU law may act as issuers. For asset-referenced tokens, Article 16(1) requires issuance or trading admission to be undertaken only by EU-established and authorised entities. MiCAR explicitly recognises e-money tokens referencing non-EU currencies such as the U.S. dollar, but the territorial establishment requirement prevents non-EU issuers from offering them directly to the EU public. Exceptions are limited to offers to qualified investors or client-initiated services under Article 59, while active solicitation by third-country firms is prohibited. These requirements are not merely formalities: they reflect MiCAR’s broader framework of custody, segregation, and liability obligations. In particular, reserve assets must be safeguarded by EU-authorised custodians, ensuring direct supervisory oversight of how reserves are held and managed.

Practical market access implications

 The structural contrast is clear. Under the GENIUS Act, a European stablecoin issuer compliant with MiCAR could—subject to Treasury recognition of equivalence—enter U.S. markets without establishing a U.S. subsidiary. Under MiCAR, however, a U.S. issuer authorised under the GENIUS Act cannot directly access EU markets and must establish a separate EU entity, obtain authorisation, and comply with the full range of prudential, governance, custody, and reporting requirements.

This divergence reflects different regulatory philosophies. The U.S. model privileges conditional openness based on functional equivalence, recognising that different jurisdictions may achieve comparable outcomes through different means. The EU model insists on territorial establishment to ensure direct supervisory control, embedding systemic safeguards into its single-market architecture.

For global issuers, the operational consequence is evident: the U.S. framework offers pathways to consolidate operations across jurisdictions through reciprocity, while the EU framework requires parallel structures and compliance infrastructures tailored to its harmonised rulebook.

Investor protection and disclosure

 While "Project Crypto" supports flexible and purpose-driven disclosure to balance investor protection with innovation needs, MiCAR prioritises standardised disclosure as a non-negotiable prerequisite. The US approach allows for "lighter" or "tailored" disclosure for crypto-asset offerings, with safe harbours for certain activities.

MiCAR requires comprehensive white papers with detailed content requirements in several categories, including environmental impact disclosure. Marketing restrictions and conflict of interest rules ensure that investor protection remains central to market access. The EU regulation also provides retail holders with a 14-day withdrawal right when purchasing crypto-assets directly from issuers.

Documentation strategy

 A token issuer preparing market documentation for launch in the United States may adopt an agile and risk-based disclosure approach, consistent with the modular model provided by the GENIUS Act. To access the EU market, the same issuer is required to prepare a white paper that complies with MiCAR requirements, with pre-launch validation and a set of structured information that reflects the objective of ensuring harmonised and consistent ex ante disclosure at the internal market level. This difference requires the adoption of dual documentation strategies capable of satisfying heterogeneous regulatory approaches, with consequent implications in terms of operational complexity.

Custody: liberalisation vs. structural guarantees

 The US approach emphasises the liberalisation of regulatory frameworks for custody, affirming self-custody rights while modernising intermediary custody through an interpretative recalibration of existing constraints. The Presidential Working Group supports "self-custody as a fundamental value" and recommends modernising intermediary custody through the abolition or interpretation of existing constraints. Recent regulatory actions include the SEC's revocation of Staff Accounting Bulletin (SAB) No. 121, which had created regulatory burdens for digital asset custody services.

MiCAR structurally integrates custody protections, requiring the separation of client assets, clear identification, and robust operational safeguards to mitigate counterparty risk. Crypto-asset service providers must take appropriate measures to safeguard property rights, particularly in the event of insolvency, and prevent use of their own account. The regulation establishes comprehensive liability frameworks in which custodians are liable for the loss of crypto-assets, unless it is proven that the loss was due to external events beyond their reasonable control.

This contrast illustrates the broader regulatory philosophy: the United States prioritises market access and speed of innovation, while the EU emphasises structural protections and risk mitigation.

Trading venues and platform integration

 The Project Crypto supports the integration of multiservice "super-apps" which allow staking, lending, and trading to coexist with flexible regulatory treatment. The Presidential Working Group urges the SEC/CFTC to allow vertically integrated trading platforms that perform multiple market functions, while challenging traditional functional segmentation. This approach recognises that 'digital asset markets operate differently from equity, bond, commodity and derivatives markets' due to the underlying distributed ledger technology.

MiCAR allows multiservice trading, but only through well-defined pathways. Article 76 of MiCAR establishes transparent operating rules, admission criteria, fair participation and full pre- and post-trade transparency. Passport rights guarantee post-authorisation scalability, while strict notification requirements ensure supervisory visibility. The regulation requires platforms to have detailed operating rules, resilient systems and transparent and non-discriminatory access rules.

Operational implications

 A platform seeking to offer integrated trading, custody and staking services could move quickly in the United States thanks to flexible licensing frameworks. However, it would need to demonstrate clear internal role delineation and modular responsibility to meet MiCAR requirements in the EU.

Market Abuse and Trading Integrity

 MiCAR Title VI (Articles 86-92) establishes a comprehensive market abuse framework specifically for crypto-assets admitted to trading, including precise definitions of inside information under Article 87 and detailed prohibition frameworks for insider dealing (Article 89), unlawful disclosure (Article 90), and market manipulation (Article 91). The US framework under “Project Crypto” addresses market integrity through modernisation-oriented approaches, typically addressing risk through issuer-led controls and iterative adjustments.

Decentralised finance (DeFi)

 US policy aims to immediately include DeFi protocols within its supervisory scope, minimising the intermediation imposed to avoid stifling innovation. The Presidential Working Group emphasises that truly decentralised protocols should not be forced to fall under traditional regulatory frameworks for intermediaries. The SEC is considering exempting certain DeFi service providers from registration requirements as broker-dealers, exchanges and clearing agencies.

MiCAR takes a gradual and empirical approach in accordance with Article 140, which requires interim and comprehensive assessment reports on the development of DeFi by June 2025 and June 2027, respectively. The regulation recognises that services provided in a 'fully decentralised manner without any intermediary' do not fall within its scope, but it maintains that the regulatory framework applies to services provided in a decentralised manner by intermediaries.

Temporal risk

 A DeFi protocol that distributes liquidity pools through self-executing smart contracts could be launched on the US market within a few weeks thanks to an innovation exemption. However, the same protocol entering the EU would face legal uncertainty. MiCAR excludes from its scope services provided in a ‘fully decentralised manner without any intermediary’ (Recital 22) but does not clearly define the boundary between fully and partially decentralised systems. Article 140(2)(t) requires the Commission to report by 2027 on the appropriate regulatory treatment of decentralised systems, without providing an interim safe harbour. As a result, DeFi projects in the EU operate during a temporal gap where classification remains unclear, creating uncertainty over recognition, scalability, and market reputation.

Facilitating innovation

 The United States offers broad exemptions for innovation, reducing prescriptive constraints to accelerate time-to-market. The Presidential Working Group recommends creating new exemption pathways for tokenised securities, airdrops, DeFi protocols and other innovations. Regulatory sandboxes with clear criteria and graduation pathways are encouraged to facilitate responsible innovation.

MiCAR, on the EU side, does not explicitly frame exemptions as ‘innovation-facilitating,’ yet its regulatory architecture reflects this intent by embedding proportionality through threshold-based exemptions for small or limited offers and by allowing credit institutions to provide crypto-asset services via a notification-based mechanism, without requiring additional MiFID II authorisation. Consistent with Recital 6, MiCAR does not regulate the underlying technology itself, but rather the market conduct surrounding its use. Recital 16 reinforces this design, requiring EU legislation on crypto-assets to remain specific, future-proof, proportionate, and incentive-based, to keep pace with innovation and technological developments.

This divergence reflects the trade-off between speed and certainty: the United States prioritises rapid market entry with iterative refinements, while the EU invests in measured and supervised innovation pathways.

In general, the choice between a modular regulatory model and a codified one reflects profoundly different strategic visions. The United States favours speed of adaptation and competitiveness through flexible, iteratively perfectible categories, but this comes with higher exposure to market failures, consumer harm, and potential spillovers into the traditional financial system. In contrast, the European Union pursues ex ante regulation that is harmonised and focused on systemic and investor protection, which reduces the likelihood of destabilising shocks but entails slower time-to-market and the need for more complex compliance organisation. This difference is legally significant and requires operators to carefully calibrate their compliance frameworks, product design choices and cross-border positioning strategies in line with a regulatory environment that is likely to remain structurally divergent, at least in the medium term.
 

Operational management of regulatory divergence: an adaptive approach

The absence of a mutual recognition framework forces companies to manage different classification regimes simultaneously, requiring operational strategies capable of addressing divergent regulatory constraints on authorisation times, disclosure and service configuration. In this context, rigorous dual mapping of US and European requirements for each product becomes essential to prevent unexpected reclassifications and authorisation delays. The preparation of dual documentation, although burdensome, is an unavoidable constraint to ensure the transatlantic circulation of instruments.

At the operational level, the design of flexible business architectures capable of scaling quickly from aggregate configurations to separate modules – makes it possible to anticipate the segmentation requirements of MiCAR for the provision of crypto-asset services. The preventive integration of ESG metrics into disclosure processes, although not mandatory in the United States, becomes a key element in reducing reputational risk when accessing the EU market.

At the same time, timely technical dialogue with supervisory authorities, supported by robust risk and governance models, mitigates application uncertainty and guides more pragmatic regulatory choices. The preparation of stress tests for 'regulatory shock' scenarios – such as the designation of a token as 'significant' or the sudden reclassification of a DeFi protocol – ensures operational readiness to deal with sudden increases in compliance obligations.

Companies that integrate regulatory divergence management into their operating models, treating it as a structural component of their cross-border strategy, will be able to transform regulatory complexity into a differentiating factor, strengthening their resilience and consolidating their position in global markets.

Concluding note

The coexistence of the US "Project Crypto" agenda and the EU's MiCAR framework creates a dynamic but divergent regulatory landscape that reflects deep philosophical differences on the role of regulation in promoting innovation while protecting consumers and maintaining financial stability. This divergence produces structural consequences: the US framework is oriented toward rapid market entry through conditional flexibility, while the EU framework embeds stricter entry conditions and ongoing oversight to prioritise systemic resilience and investor safeguards. Although harmonisation appears unlikely in the short term, both frameworks share fundamental objectives and could find common ground as markets mature, and international coordination intensifies.

For market operators, success depends on developing sophisticated compliance strategies that bridge the gap between US markets seeking speed and the European environment demanding certainty. This requires not only technical compliance, but also a strategic reflection on how to leverage the strengths of each regulatory approach while mitigating the risks associated with operating in divergent regulatory frameworks, notably in areas such as classifications, disclosure requirements, and market-access conditions.

Traditional financial institutions entering the crypto-asset sector have inherent advantages in navigating complex regulatory environments, given their experience in cross-border compliance and risk management. By overlaying native digital offerings on top of trusted compliance infrastructure, these institutions can capture emerging opportunities while mitigating operational and regulatory risks.

The ultimate test of both regulatory approaches will be their ability to promote innovation while maintaining market integrity and consumer protection. As the global crypto-asset ecosystem continues to evolve, the interaction between these two main regulatory frameworks will significantly influence the future development of digital finance, potentially setting precedents for regulatory approaches worldwide.

A constructive engagement with regulators, based on operational reality rather than lobbying rhetoric, can be a differentiator for companies that can leverage their traditional strengths in risk management while aligning themselves with the evolving needs of digital finance. The companies best positioned to thrive beyond the regulatory divide between the United States and the European Union will be those that view regulatory complexity not as a hurdle but as a competitive advantage, using sophisticated compliance capabilities to access opportunities that less prepared competitors cannot pursue.

Note: These considerations reflect known points of friction in the current US and European regulatory landscape for crypto-assets. Changes to legislation or enforcement priorities may alter the risk profile. As a result, proactive monitoring remains essential for anyone operating or investing in both jurisdictions.

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[1] Under Article 3(1)(7) MiCAR, e-money tokens (EMTs) are defined as referencing the value of one official currency, without limitation to currencies of EU Member States. This is confirmed by Article 48(2), which distinguishes EMTs referencing a Member State currency from those referencing other official currencies, and by Article 58, which applies specific provisions to EMTs denominated in non-EU currencies. In practice, EMTs referencing the U.S. dollar (such as USDC) are already notified under MiCAR. Consequently, EMTs can reference both EU and non-EU official currencies, while tokens referencing baskets of currencies or non-currency assets fall within the category of asset-referenced tokens (ARTs).