That's the big question. Continents have been drifting around on top of the liquid mantle for hundreds of millions of years, bumping together and splitting apart, building mountain ranges and then separating to create new oceans.
Geologists have been figuring out borders from chemical signatures of rocks along coastlines and in the interior in some cases. In the Pangea period, you could walk from Europe across Greenland to N. America, then volcanism rifted it all apart into the Eurasian plate and the N. American plate with the sea floor spreading apart between them. The next earlier was the Gondwan period, and the arrangement was different and I don't think that particular route was possible.
Given the large quakes along the Reykjanes Rise west of the island, I'd put my money on emerging. Iceland is a rift zone with a hot spot underneath it, so chances are that it's going to continue getting bigger, much bigger. We might not just be seeing a volcanic island full of people making their livings from fish, sheep, and tourism*, we might be seeing the creation of an entirely new continental plate.
*Oh yeah, and aluminum smelting. Big companies ship the ore there to be smelted in electric furnaces using geothermal energy generation. It's a lot cheaper to do it that way.
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