European leadership in digital finance regulation: Pros and cons

The European Union has a tendency to be a first mover in regulating new industries, new risks or new technologies, particularly in digital domains. The General Data Protection Regulation (GDPR), adopted in 2016, set standards for privacy protection that later became a global benchmark imitated in many jurisdictions. The Digital Markets Act (DMA) and the Digital Services Act (DSA), both adopted in 2022, were also pioneers in regulating Big Tech activities and their implications for competition. The EU was also the first major jurisdiction to regulate artificial intelligence in 2024. In digital finance, Europe was the first to regulate the crypto-assets world through the Markets in Crypto-Assets regulation (MiCA), adopted in 2023.

One reason for the EU Commission to act relatively early in regulating new areas is to avoid a proliferation of potentially inconsistent national regulations. In this regard, the EU would benefit from greater clarity in delimiting national versus EU regulatory competences, which is particularly complicated when applied to new technologies.