- MiCA led the way for global crypto laws.
- But the EU regulations must be updated.
- Gemini’s Europe CEO makes that argument.
Mark Jennings is crypto exchange Gemini’s Europe CEO. Opinions are his own.
One year after its implementation, and with over 100 firms already authorised as crypto asset service providers, the European Union’s Markets in Crypto-Assets regulation, or MiCA, has proven itself as the world’s first comprehensive crypto rulebook and a much-needed part of Europe’s regulatory landscape.
Competing jurisdictions are already implementing lessons learned from MiCA, including the UK Government’s crypto roadmap, stablecoin reserve requirements within the US’ Genius Act, and Hong Kong’s Stablecoins Bill.
Yet it’s far from perfect.
Uncertainty around MiCA’s future supervisory oversight, along with unclear guidelines and burdensome requirements, risks stifling innovation.
For MiCA to become one of the world’s most robust regulatory frameworks, policymakers must fix the current regime’s drawbacks, incorporate industry feedback and offer clarity, whilst considering how supervision is structured within a “MiCA 2.0.”
Supervisory structure
The European Securities and Markets Authority, or ESMA, recently signalled its intent to take over centralised supervision of all CASPs, prompting contrasting reactions across the EU.
Regardless of which authority oversees MiCA, it’s vital that we’re regulated by someone with sufficient expertise, resources, and understanding of fast-evolving crypto business models.
EU member states have already built much of this regulatory experience, so any move towards centralisation should preserve this.
Furthermore, firms regulated under Markets in Financial Instruments Directive, or MiFID, and Payment Services Directive, or PSD, will remain supervised at the national level.
Centralised supervision would therefore create problems for those holding several licenses, as they would be subjected to multiple reporting lines.
This is an avoidable burden when streamlined.
Indeed, cross-border rules are essential for European firms to maintain competitiveness.
Clarifying MiCA’s Jurisdiction
ESMA must incorporate industry feedback to ensure that regulation is effectively guided.
Greater clarity is essential regarding MiCA’s scope, as existing rules don’t adequately cover emerging use cases such as tokenised real-world assets, staking, and yield-bearing products.
MiCA 2.0 should include rules defining the boundary between MiCA and frameworks for payments and investment services, such as PSD and MiFID.
Further guidance is also required on market-structure issues, including shared order books and hybrid execution models, to allow companies to design compliant business models.
Stablecoins: A key battle
Stablecoins will play a central role in the future payments infrastructure, and it’s crucial that MiCA establishes clarity on their use and issuance.
At present, stablecoins are marred by regulatory ambiguity, adversely affecting users, issuers and CASPs — with many issuers receiving fines for rule violation.
While the January 2025 ban on non-MiCA-compliant stablecoins was intended to protect customers, it triggered frantic liquidations, leading to fragmented liquidity.
Additionally, greater definition is needed on multi-issuance models, redemption responsibilities, and reserve standards to ensure the EU’s stablecoin framework addresses risks, while Euro-denominated stablecoin use grows.
Maintaining global competitiveness
If Europe intends to preserve its regulatory leadership, MiCA 2.0 must deliver clear, proportionate regulations that are consistently applicable across all member states.
Allowing time for successful solutions to MiCA’s issues, not just supervisory adjustments, can secure Europe’s competitive advantage.
