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Europe's crypto market entered a new era on Wednesday as the European Union's Markets in Crypto-Assets (MiCA) regulation came into full effect, requiring any crypto firm serving customers across the 27-nation bloc to hold a MiCA license or cease operations. Thousands of providers were legally obligated to stop servicing EU customers as of June 30, leaving millions of users hunting for a MiCA-approved platform.
The single regulatory framework was welcomed by executives and lawyers, who agreed consumer protection and transparency benefit from harmonised rules. Industry leaders interviewed disagreed, however, on whether MiCA creates a fair market, with some warning that compliance costs could disadvantage smaller firms and benefit larger, better-resourced competitors.
Why it matters
Dr. Joseph Borg, a Maltese lawyer and partner at WH Partners who has advised crypto firms since 2016, told CNBC that regulating crypto on a European level is a "very positive thing" and "necessary." He expects the bloc to shrink from roughly 3,000 registered crypto asset service providers to only 300 or 400 licensed firms under MiCA, a consolidation he said would suit regulators. "I'm noticing that regulators are becoming more and more lazy," Borg said. "They prefer having 20 operators to regulate rather than invest in more technology and more human resources to supervise more operators."
Market impact
Alex Fazel, chief partnership officer at SwissBorg, pushed back, arguing licensing hinges on transparency rather than resources. "A MiCA license is not something you can buy because you have money and power," Fazel said. "It is making sure every process is fully transparent." SwissBorg received its MiCA license through France's financial markets regulator this year. Yet Fazel acknowledged startups face the steepest climb: "If there's one segment I feel bad for, it's startups. Innovation may suffer for companies that don't have enough capital."
Dr. Lin Han, founder and CEO of Gate Group, said the framework only works if every operator follows it.
Frequently asked questions
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What did MiCA change on June 30?
MiCA came into full effect on June 30, requiring any crypto firm serving customers across the EU's 27 member states to hold a MiCA license or stop operating. Thousands of providers were legally obligated to cease servicing EU customers at midnight.
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How many crypto firms could lose access under MiCA?
Maltese lawyer Dr. Joseph Borg told CNBC he expects the bloc to shrink from roughly 3,000 registered crypto asset service providers to as few as 300 or 400 licensed firms. He argued regulators prefer supervising fewer, larger operators.
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Does MiCA favor large crypto companies over startups?
Industry leaders interviewed disagreed. Borg said the compliance burden disadvantages startups because larger firms can afford bigger legal and compliance teams. SwissBorg's Alex Fazel countered that licensing hinges on transparency rather than resources, though he acknowledged startups face the toughest capital…
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Can ESMA stop unlicensed offshore exchanges from serving EU customers?
ESMA has warned that firms serving EU clients without MiCA authorization are breaching EU law and has cautioned against relying on reverse solicitation workarounds. Gate Group CEO Dr. Lin Han questioned whether regulators have the resources to actually block offshore platforms from continuing to serve European users.
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Is the MiCA framework expected to last?
All three executives interviewed agreed crypto regulation in Europe is here to stay. Borg said MiCA's rollout means crypto has become too embedded to ban, while Fazel said stronger oversight should improve consumer protections by giving customers legal recourse when licensed firms fail.
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