Following the announcement by social media giant Facebook (NASDAQ:FB) that it plans to launch its own cryptocurrency by 2020, U.S. President Donald Trump felt compelled to voice his feelings regarding Bitcoin and cryptocurrencies.
In a recent tweet, the president said he is "not a fan of Bitcoin" and that its value is "based on thin air". Continuing, he stated that if big tech companies like Facebook wish to launch cryptocurrencies they must first follow proper regulations to "become a bank." Initially, the cryptocurrency market was not negatively affected by the news but further comments from U.S. Federal Reserve Chairman Jerome Powell resulted in a 10 percent loss on the markets.
The comments and ensuing furor within the cryptocurrency community highlight the stark differences between cryptocurrency regulations in the European Union and the United States.
Different methods of interpreting the law
The main difference stems from the legislation that is already in place in the two markets. The EU's relatively new and far more complex system requires a decision process that encompasses several sovereign nation-states, whereas the U.S. benefits from pre-ordained legislation going back centuries that clearly defines the process between state and federal decision making.
Due to the U.S. operating on a 'common law' system, cases are dealt with independently and often rely heavily on a final ruling from a single judge. For this reason, many small crypto-related projects have received penalties from the U.S. Securities and Exchange Commission (SEC) over the years for not properly following regulatory measures.
In the EU, no such fines have been imposed as th...