Is Europe’s right-wing surge a catalyst for crypto market boom?

How could right-wing parties’ support for economic freedom affect the growth of the crypto market in Europe?

Europe is undergoing critical political change, with right-wing parties gaining momentum across the continent.

In recent European elections, parties such as Marine Le Pen’s National Rally in France and Giorgia Meloni’s Brothers in Italy made significant gains, pointing to the rising trend of Euroscepticism and populism.

IT IS HAPPENING 🇩🇪

The right-wing party in Germany is celebrating being the second largest party in the EU elections.

All over Europe the right witnessed major victories.pic.twitter.com/1fwsVnCkuo

— PeterSweden (@PeterSweden7) June 9, 2024

Historically, political instability has driven investors to safe-haven assets, and cryptocurrencies such as Bitcoin (BTC) have often filled this role.

Michaël van de Poppe, a well-known crypto analyst, recently talked about this phenomenon and stated that political turmoil in Europe could increase Bitcoin’s appeal.

Governments across Europe are collapsing.

The right wing has big victories in the European elections.

It’s going to be a crazy ride.

LONG #Bitcoin.

— Michaël van de Poppe (@CryptoMichNL) June 9, 2024

Meanwhile, the new structure of the European Parliament could lead to changes in crypto regulation. Right-wing parties known for advocating economic freedom and reduced government intervention may push for a more lenient regulatory environment.

If this shift happens, it could spur innovation and attract crypto entrepreneurs to Europe, increasing the region’s role in the global crypto market.

For example, the European Conservatives and Reformists (ECR) and Identity and Democracy (ID) parties, which both won seats, have historically supported less restrictive economic policies.

If these parties influence the legislative agenda, we could see the return of strict crypto regulations, making Europe a more attractive destination for crypto investments and startups.

The political climate can also influence broader economic policies, such as the EU’s Green Deal. Right-wing parties have often expressed skepticism about comprehensive climate regulations that could lead to reallocation of resources and indirectly benefit the crypto sector, especially in areas related to energy consumption and mining operations.

What’s going on and where might things go? France: A potential shift in crypto policy

France has become a notable player in the crypto world, thanks in large part to President Emmanuel Macron’s supportive stance. Macron’s administration has made Paris a hub for crypto innovation by providing tax incentives and regulatory clarity.

Companies such as Ledger, known for its secure hardware wallets, and fantasy football platform Sorare, which uses blockchain, have flourished.

However, Macron’s call for early parliamentary elections on June 30 and July 7 creates uncertainty about the future. Policy towards crypto could change if the National Rally party, a far-right party, wins a majority.

Map of Germany and France showing yesterday’s EU parliament election results. The populations of the EU’s two largest countries used the election to send a message to Berlin and Paris that they wanted ‘regime change’. Macron responded with early elections in France… pic.twitter.com/eqsJfW4w10

— Niall Bradley (@Niall_Diarmuid) June 10, 2024

Le Pen has historically been skeptical of cryptocurrencies. He called for a ban on Bitcoin in 2016 but has since softened his stance to support strict regulation.

Meanwhile, under Macaron, France has shown a willingness to adapt its policies to support innovation. In 2019, the French Financial Markets Authority (AMF) passed the PACTE law, which provides a legal framework for ICOs (Initial Coin Offerings) and sets clear rules for crypto firms.

The other side of Germany

Germany’s political arena is also changing as the far-right Alternative for Germany (AfD) gains power.

The AfD’s skepticism towards centralized financial systems and the euro may influence their stance on cryptocurrencies, as they could potentially benefit the crypto market by advocating decentralized financial structures.

However, Germany’s environmental concerns regarding crypto mining cannot be ignored.

Despite losing some seats, the Green Party continues to campaign against the environmental impacts of cryptocurrencies, especially those based on energy-intensive proof-of-work mechanisms such as Bitcoin.

Germany took a significant step in 2021 by including crypto assets within the scope of tax laws and treating them similarly to traditional financial instruments.

Germany has also been a pioneer in integrating blockchain into its financial system. The German Bundesbank is exploring the potential of blockchain to increase the efficiency and security of financial transactions.

Moreover, in 2020, Germany further asserted its position as a crypto-friendly country by passing a law allowing banks to sell and store cryptocurrencies.

The rise of the AfD could lead to a push for more decentralized financial systems and less central control; This aligns well with the ethos of cryptocurrencies. But balancing this with environmental concerns will be crucial.

Italy: A supportive stance from the right

Italy presents a complex scenario, with Giorgia Meloni’s Brothers of Italy leading a coalition that also includes the far-right League. This coalition’s mixed views on economic policies could lead to a fragmented approach to crypto regulation.

Some groups may support a more liberal regulatory framework, while others may push for tighter controls to address concerns about money laundering and financial stability.

In the past, Italy has taken steps to regulate the crypto market. In 2022, the Italian Ministry of Economy and Finance introduced regulations requiring crypto service providers to register with the national regulator to increase transparency and combat illegal activities.

However, enforcement of these regulations is inconsistent and leads to an uncertain environment for cryptocurrency businesses.

Despite these challenges, Italy is seeing increasing interest in blockchain technology. The Italian Banking Association (ABI) is exploring the use of blockchain to improve interbank processes, and many Italian companies are experimenting with blockchain-based solutions for supply chain management and other applications.

The coalition government’s approach to crypto will likely be a balancing act. While there will be a push to support innovation and make Italy a hub for blockchain technology, there will also be pressure to introduce strict regulatory measures to prevent abuse.

European Union and MiCA regulations

On a broader scale, the European Union’s upcoming CryptoAsset Markets (MiCA) regulations are set to create a unified regulatory framework for the crypto industry across member states.

These regulations aim to provide legal certainty, protect consumers and support innovation. The MiCA law, which will come into full force by the end of 2024, will cover various aspects of the crypto market, including stablecoins and ICOs.

Key MPs such as Stefan Berger and Ondrej Kovarik, who were instrumental in shaping the EU’s crypto policy, were re-elected. Their continued presence in the European Parliament provides some stability and continuity in regulatory changes.

Known for his work on MiCA, Berger advocates for balanced regulation that supports innovation while ensuring consumer protection. His influence can ensure effective implementation of new regulations.

What do experts think?

The political situation in Europe is changing, creating potential changes for the crypto industry. To investigate this, crypto.news spoke with Sergei Peshkov, Head of Business Development at UpGate, and Nejc Žnidar, Co-Founder of Cogito Protocol.

Europe is not a one-size-fits-all region; Every country has its own political and economic quirks. But a common challenge is sustaining economic growth due to an aging population and rising welfare costs. The crypto industry, seen as a lucrative source of tax revenue, stands at a critical point. Peshkov emphasizes:

“For both left and right parties, the crypto industry is a potential source of tax revenue. Regardless of political changes, crypto regulation that enables efficient taxation is likely.”

There is a perception that right-wing parties may support less regulation and potentially boost the crypto industry. However, Peshkov states:

“Right-wing parties may advocate for a lower tax burden on crypto industries, but this does not necessarily mean less regulation. “The EU tends to be bureaucratic and leans towards a unified approach.”

Žnidar adds:

“Less regulation does not automatically mean better for innovation. “We need reasonable and informed laws that are compatible with new technologies.”

While Europe’s political climate is crucial, its impact on the global crypto market may be limited. Peshkov states:

“Political climate change in the EU could shake things up for European crypto users. However, this factor alone is unlikely to change the global landscape as crypto users in the EU make up less than 4% of the global crypto audience.”

Žnidar concluded his words as follows:

“The current political environment has the power to dynamically change sentiment towards crypto, but at the current stage, people outside working groups and blockchain-focused departments are starting to understand that cryptocurrency does not automatically mean a scam. ”

road ahead

Looking back, we see that political changes constantly affect financial markets and the current scenario in Europe is no different.

Historical data reveals that political instability often drives investors to safer assets. Bitcoin, for example, saw huge increases during Brexit uncertainties and the Eurozone crisis.

Currently, with right-wing parties gaining ground, the stage is being set for potential changes in crypto regulations. The European Conservatives and Reformists (ECR) and Identity and Democracy (ID) parties, which support less restrictive economic policies, have increased their influence.

If they drive the legislative agenda, we could see the return of strict regulations that could position Europe as a more attractive hub for crypto investments.

But this change is complex. While the rise of right-wing parties may champion innovation and attract crypto entrepreneurs, balancing this with environmental concerns and cracking down on illegal activities will be crucial.

Will Europe seize this opportunity to lead the global crypto market? Only time will tell.