As Europe’s crypto regulatory regime comes fully into force, industry participants largely agree that regulation is now a permanent feature of the sector, though they remain divided on whether it strengthens consumer protection or disproportionately benefits larger firms.
The European Union’s crypto industry entered a new era on Wednesday as the Markets in Crypto-Assets (MiCA) framework became fully effective. Under the new requirements, crypto firms operating across all 27 EU member states must obtain authorization or exit the market.
Thousands of crypto service providers were forced to suspend operations after being required to stop serving EU customers by midnight on June 30, leaving millions of users seeking MiCA-compliant platforms.
While the introduction of a unified EU-wide regulatory system has been broadly welcomed by executives and legal experts, opinions differ on its broader consequences. Some argue that the cost of compliance is pushing smaller firms out of the market and encouraging them to relocate to jurisdictions such as Dubai. Others believe the framework appropriately rewards companies that have invested in transparency and strong governance. A key concern remains whether regulators can effectively prevent offshore platforms from continuing to access EU users without authorization.
Joseph Borg, a Maltese lawyer and partner at WH Partners, described European-level regulation as a positive development, saying, “Regulation is necessary.”
However, he argued that the central challenge now lies in enforcement rather than legislation, suggesting regulators may struggle with supervision at scale. He estimated that MiCA could reduce the number of crypto asset service providers in Europe from roughly 3,000 to between 300 and 400 licensed firms.
Borg also noted that regulators appear inclined to oversee fewer entities rather than expand the resources needed to supervise a broader market.
On competitiveness, he said rising compliance requirements tend to favor firms with larger legal and operational teams. While MiCA is not explicitly designed to favor big players, he argued that its technical and supervisory demands make it more difficult for startups to compete.
Others take a different view. Alex Fazel, chief partnership officer at SwissBorg, said MiCA licensing is primarily about proving transparency rather than company size.
“Transparency is key,” Fazel said. “You cannot build trust without transparency.”
SwissBorg obtained its MiCA authorization through France’s financial regulator this year, a process Fazel said required detailed documentation of governance, compliance, and operational procedures.
He stressed that licensing is not something that can be bought through financial strength alone. “A MiCA license is not something you can buy because you have money and power,” he said.
Still, Fazel acknowledged that startups face the toughest conditions, as the cost of obtaining and maintaining compliance may restrict innovation among smaller players.
For regulated exchanges, another unresolved issue is enforcement against offshore platforms. Lin Han, CEO and founder of Gate Group, said compliant firms have spent years preparing for MiCA, but the framework only works if all market participants follow 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 warned that unlicensed firms serving EU customers are in breach of EU law and should cease operations. It has also discouraged “reverse solicitation” practices and encouraged measures such as geo-blocking to restrict access.
However, Han questioned whether regulators have sufficient capacity to prevent offshore platforms from continuing to serve EU users.
“If unregulated or unregistered platforms can still provide services, then it’s not a level playing field,” he said.
Despite differing opinions, all three agreed that crypto regulation in Europe is here to stay. Borg said MiCA has increased engagement between traditional banks and crypto firms, while Han noted that Europe remains too significant a market for global exchanges to ignore despite higher compliance costs. Fazel added that stronger oversight improves consumer protection by increasing accountability and providing clearer legal recourse.
“I really see regulators as a net positive for the industry,” Fazel said. “They’re here to verify.” Borg added that MiCA’s rollout reflects the maturation of the crypto industry, noting that it has become too large to realistically ban or suppress.
