As Europe’s crypto regulatory framework fully comes into force, industry participants broadly agree that oversight is now permanent, but remain divided on whether it primarily safeguards consumers or tilts the market in favor of larger players.
The European Union’s cryptocurrency sector entered a new phase on Wednesday as the Markets in Crypto-Assets (MiCA) regime became fully operational. Under the rules, any crypto firm serving clients across the 27-member bloc must now obtain a license or cease operations.
Thousands of crypto service providers risk suspension and were legally required to halt services in the EU by midnight on June 30, forcing millions of users to search for MiCA-compliant platforms.
While executives and legal experts broadly support the introduction of a unified EU-wide framework, they disagree on its competitive impact. Some argue that high compliance costs effectively shut out smaller firms, pushing them to relocate to jurisdictions such as Dubai. Others contend that the rules appropriately reward firms that have invested in strong governance and transparency. A further concern is whether regulators can effectively stop unlicensed offshore platforms from continuing to target EU customers.
Joseph Borg, a Maltese lawyer and partner at WH Partners who has worked with crypto firms since 2016, said European-level regulation is a positive development. “Regulation is necessary,” he said.
However, Borg noted that the main issue now lies in enforcement rather than legislation, arguing that supervisory capacity is becoming the limiting factor. He estimates that the number of crypto asset service providers in Europe could fall from around 3,000 to just 300–400 licensed firms under MiCA, a level he suggested regulators may prefer.
He added that regulators appear increasingly inclined to oversee fewer firms rather than invest in the technology and staffing needed to supervise a larger market.
On the question of market fairness, Borg said rising compliance costs disproportionately favor companies with larger legal and operational resources. Although MiCA itself is not explicitly designed to benefit large firms, he argued that accompanying technical and supervisory requirements make it harder for startups to compete.
Not all industry voices agree. Alex Fazel, chief partnership officer at SwissBorg, said MiCA licensing is more about operational transparency than company size.
“Transparency is key,” Fazel said. “You cannot build trust without transparency.”
SwissBorg obtained its MiCA authorization via France’s financial regulator this year. Fazel explained that the process required extensive documentation of governance structures, compliance systems, and operational procedures.
He added that licensing cannot simply be purchased through financial strength. “A MiCA license is not something you can buy because you have money and power,” he said, emphasizing that it depends on full procedural transparency.
Still, Fazel acknowledged that startups are likely to face the greatest challenges, as securing and maintaining authorization demands significant capital investment, which may slow innovation among smaller firms.
From the perspective of licensed exchanges, another unresolved issue is enforcement against offshore platforms. Lin Han, founder and CEO of Gate Group, said compliant firms have long prepared for MiCA, but the system only functions if all participants adhere to the same rules.
“Everybody needs to follow the rule,” Han said. “Then we can compete on better service for users.”
The European Securities and Markets Authority (ESMA) has stated that firms serving EU customers without authorization are in violation of EU law and should cease operations. It has also cautioned against relying on “reverse solicitation” and encouraged measures such as geo-blocking to restrict access.
However, Han questioned whether regulators have sufficient resources to prevent unlicensed operators based outside the EU from continuing to serve European users.
“If unregulated or unregistered platforms can still provide services, then it’s not a level playing field,” he said.
Despite differing views, all three figures agreed that crypto regulation in Europe is now a permanent fixture. Borg said MiCA has encouraged greater engagement from traditional banks with crypto firms, while Han noted that Europe remains too significant a market for global exchanges to ignore despite higher compliance costs. Fazel argued that stronger regulation enhances consumer protection by improving legal recourse and market stability.
“I really see regulators as a net positive for the industry,” Fazel said. “They’re here to verify.” Borg added that MiCA’s implementation signals crypto’s maturity, noting that the industry has become too large to effectively suppress or ban.
About The Author
More Stories
Bitcoin Nears $60K as Fed Chair Warsh Signals Easing Inflation Risks
Standard Chartered Sees Morpho Emerging as Key DeFi Infrastructure Player
Citi Cuts Bitcoin and Ether Price Targets as ETF Inflows Slow