Europe just elected 702 members of the European Parliament. Some would call the vote a grand exercise of democracy. Others would call it a repurposed opinion poll for domestic politics. The results show that it is a bit of both.
Broadly, Sunday’s outcomes were forecasted. The snap elections in France were not.
The main takeaway is that decisions in the European Parliament will continue to be made by a centrist majority. Together, the center-left Progressive Alliance of Socialists and Democrats (S&D), the center-right European People’s Party (EPP), and the liberal Renew will hold more than 410 votes. This is enough majority for both policymaking and to re-elect the current President of the European Commission.
The press is reporting a shift to the right. This is technically accurate. The far-right secured big victories in the heart of Europe, including in Germany, France and Italy. Mainly the Nordics and Portugal bucked the trend and gave fewer votes to the eurosceptics than forecasted.
This signals a disturbance in our societies, but to say that the far-right will now decide EU policy is an exaggeration. The biggest EU political group, the EPP, has deep ideological divergences from the parties sitting further on the right. Therefore, it is much more likely to formally partner in the above-mentioned centrist coalition. This has been the vehicle for Parliament decision-making to this date, and it will remain so.
The power of the further-right (ECR – the European Conservatives and Reformists) and the far-far-right (ID – Identity and Democracy) should not be overstated, but it should not be ignored either.
ECR, in particular, gained 15 seats last evening. 14 of those came from the party of the Italian Prime Minister, Georgia Meloni. She has been a much milder conservative than her election campaign might have suggested, recognizing the degree of cooperation needed with both Brussels and Washington DC in order to consolidate her power. Even so, formally working with the ECR might be a taboo for the mainstream parties. But collaboration on specific policy issues is now possible for the EPP, even if only used as a threat and a negotiation technique in disagreements with the center-left.
That includes issues like crypto-assets. In the negotiations over MiCA and the AML package, it was common to see left and right MEPs disagree on how prescriptive and restrictive the rules should be. Weeks of negotiations were spent in stand-offs around the EU Travel Rule or around the sustainability of bitcoin.
Several caveats before we color the new right-wing formation as positive for the industry.
Firstly, individual MEPs have made an outsized difference to EU crypto policy. Their influence combines an ability to operate within the ideology of their group, within the responsibilities given to their committee, and a high degree of understanding of the industry. This tri-factor is hard to come by, and the industry will be fortunate to see some of these progressive voices return to Brussels.
Secondly, ECR as a whole and PM Meloni’s party, specifically, have not really had a consistent view on digital assets. Within the EPP, too, the power dynamic is shifting between representatives from Poland, Spain and Germany. These are known unknowns.
Lastly, the influence of the Parliament, as an institution, should be considered in the context of where we are in the legislative cycle. The next legislative mandate, from 2024 to 2029, will not have a MiCA moment of the same magnitude. Authorities in charge of implementation at the EU and national levels will be doing the bulk of the work for the next two years.
In that sense, President Macron calling snap elections in France on Sunday could be important for the digital assets industry. Meanwhile, the European Commission has to form a view on what, if any, new policy initiatives still need to be taken in the areas of decentralization, tokenization and staking.
But there is something bigger here than election math.
Too quick or too slow, the digital assets industry is inching toward regulation and compliance. The new European Parliament and the new College of Commissioners will make a difference on whether this path is bumpy or smooth. But compliance is not enough for the industry in the long run.
These elections come at a crucial time in Europe’s history. Far-right movements are using the continent’s depressed growth and high inflation to seed anti-European sentiments. Elected leaders have put E.U. competitiveness and the need for more active capital markets top of the agenda.
The digital assets industry has some way to go to establish trust and credibility. Whom it chooses to associate with in the next five years will be telling of what the industry stands for.
Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.