Europe’s MiCA framework is heading into a revision phase—often referred to as “MiCA 2.0”—with a consultation period set to run until around September.
It has been six years since the Markets in Crypto-Assets regulation was first proposed and three years since it took effect. Since then, the market has shifted considerably, driven in part by rising demand for stablecoins as a means of facilitating cross-border payments.
This evolution has brought fiat-pegged tokens into sharper focus as regulators revisit MiCA, which was originally crafted with spot crypto markets in mind.
The European Central Bank has consistently warned that the growing prominence of dollar-backed stablecoins could challenge its control over monetary conditions across the eurozone. While the ECB continues to prioritize the development of a central bank digital currency over private euro-denominated stablecoins, some policymakers appear to be softening their stance, according to OMFIF’s John Orchard.
Orchard noted that views within the ECB differ, but there is increasing openness to allowing stablecoins for use on bank balance sheets or in remittances. However, resistance remains when it comes to their use in wholesale settlement, an area where U.S. regulators have shown more willingness to experiment.
In contrast, the U.S. has moved forward with initiatives like the GENIUS Act, which establishes a legal framework for stablecoin payments and assigns oversight responsibilities to key regulators. Dollar-pegged tokens dominate the market, accounting for nearly all of its value, while non-dollar stablecoins remain a small fraction.
Policymakers are also grappling with concerns around deposit flight—the shift of funds from traditional banks into crypto wallets—as well as debates over whether stablecoins should offer yield. While banking lobbies on both sides of the Atlantic have opposed yield-bearing stablecoins, the European Commission is reportedly revisiting the issue, though significant changes appear unlikely.
A major distinction between the EU and the U.S. lies in reserve requirements. MiCA mandates that stablecoin reserves be largely held within the banking system, whereas U.S. approaches allow reserves to be invested in government securities. This has led to efforts like Qivalis, a consortium of banks aiming to develop a euro-denominated stablecoin that aligns with EU rules while supporting financial stability and reducing reliance on the U.S. dollar.
Europe also faces structural limitations, including the absence of a unified sovereign bond market comparable to U.S. Treasuries. One potential solution being explored is the creation of a synthetic “safe asset,” where stablecoin reserves are allocated to European money market instruments.
Another area under review is how to regulate multi-issuer stablecoins such as USDC, which can be issued by multiple entities across jurisdictions but function as a single token. Although MiCA initially intended to accommodate such models, concerns raised during implementation—particularly by the ECB—have complicated that approach.
Industry participants argue that stablecoins derive much of their value from their global nature, warning that imposing geographic constraints could undermine their utility.
Beyond stablecoins, regulators are also considering whether to centralize MiCA supervision under the European Securities and Markets Authority (ESMA). While this could reduce inconsistencies across member states, it also raises concerns about increased bureaucracy that could hinder innovation.
Currently, oversight is handled by national regulators, and any move toward centralization would require updates to the regulatory framework. Authorities are also examining how MiCA aligns with other EU financial regulations, including MiFID.
From a business perspective, companies emphasize the importance of maintaining a regulatory environment that supports growth and cross-border operations. Financial centers like Luxembourg remain attractive due to their expertise in enabling international services, and firms hope these advantages will be preserved as MiCA evolves.
Ultimately, the success of MiCA 2.0 will depend not just on refining the rules, but on fostering innovation and enabling businesses to scale effectively across Europe’s digital asset ecosystem.
