One of the biggest promises of cryptocurrency has always been the ability to move money across borders, without relying on traditional banking networks, intermediaries or opening hours.
But while blockchain technology may be borderless, the regulations governing it certainly aren’t.
Last week, Europe’s financial markets regulator, ESMA, issued new supervisory expectations concerning stablecoins that do not comply with the EU’s Markets in Crypto-Assets Regulation (MiCA).
The guidance reinforces restrictions on the services EU-authorised crypto firms can provide involving non-compliant stablecoins, including trading, custody and transfers.
The intention is understandable: greater transparency, consumer protection and financial stability.
But it raises the question if money really be borderless when regulation isn’t?
Imagine two people holding exactly the same US dollar-backed stablecoin. One lives in the European Union. The other lives in Jersey.
Both tokens exist on the same blockchain, operate using the same technology and can be transferred across the same network.
Yet the services available to those individuals could be completely different depending on where they live and which regulatory framework applies.
The blockchain hasn’t changed. The token hasn’t changed. But the rules have.
And this highlights a growing challenge for digital finance.
Traditional banking has always been shaped by geographical boundaries, different payment systems, national regulations and restrictions on when and how money can move.
Blockchain offers an opportunity to remove some of those barriers.
Yet if every jurisdiction develops a different approach to the same digital assets, are we simply recreating the fragmentation that blockchain was designed to overcome?
Of course, regulation is essential.
As stablecoins become increasingly integrated into payments, international settlement and financial markets, users need confidence in the assets backing them and the institutions responsible for issuing them.
But regulation also needs to recognise that digital assets operate across borders, even when individual financial institutions do not.
This is particularly relevant for jurisdictions such as Jersey, which sits outside the EU’s MiCA regime but maintains its own regulatory framework for digital assets and financial services.
Being outside MiCA doesn’t remove the need to consider European requirements when serving EU customers. It does, however, demonstrate how the same technology can be treated differently across jurisdictions.
And as more countries introduce their own rules for stablecoins, exchanges and digital asset services, the challenge becomes increasingly global.
The next breakthrough in digital finance won’t be another blockchain, a faster transaction or a new stablecoin. Perhaps it will be greater cooperation between regulators.
International standards, mutual recognition and proportionate regulation could help protect consumers while allowing innovation to develop across borders.
Because the future of digital finance shouldn’t require choosing between innovation and regulation.