Crypto companies already licensed under the European Union’s Markets in Crypto-Assets Regulation (MiCA) could still exit the market as compliance costs mount, according to Gate Europe’s CEO.
Giovanni Cunti told Cointelegraph’s Chain Reaction on Monday that stricter regulatory requirements have made it increasingly difficult for new entrants to compete and that some licensed firms could ultimately be unable to absorb the ongoing costs of operating under the framework.
“I think there are going to be quite a few more of the ones that acquire MiCA license that will not be capable to sustain the cost and the resources that are needed to carry on this business in the long term,” Cunti said.
MiCA is the EU’s regulatory framework for crypto assets. The bloc’s 18-month transition period ended on July 1, requiring crypto firms serving EU customers to operate under authorization or cease offering regulated services.
The deadline prompted several exchanges to restrict or withdraw services in parts of Europe while licensed firms began operating under the new regime. Binance, the world’s largest crypto exchange by trading volume, was not able to secure a MiCA license before the deadline.
Compliance costs reshape Europe’s crypto market
Cunti also warned that MiCA’s stricter regulatory requirements could drive some crypto startups and projects outside Europe. While the framework has strengthened investor protections, he said it leaves less room for innovation than jurisdictions with lighter rules.
He said some projects may choose to launch in jurisdictions with less restrictive regulatory requirements instead of navigating the bloc’s compliance regime.
“We may need to be prepared that some projects, possibly some important projects, may be looking at other jurisdictions with different guidelines,” he said.
Related: ESMA MiCA warning puts Binance EU service changes under scrutiny
To be sure, the number of companies authorized under MiCA continues to grow, albeit at a slower pace.
On Friday, the European Securities and Markets Authority added 14 crypto-asset service providers (CASPs) to its register, bringing the total to 294 after adding 37 firms in ESMA’s first update following the July 1 transition deadline.
Cunti said the higher regulatory burden is reshaping Europe’s competitive landscape, but the shrunken market also presents an opportunity for those remaining crypto service providers.
“There was a market with thousands of operators, and now there is a market with only hundreds,” Cunti said.
“So definitely there is a big opportunity for all of us. There is an ongoing migration because customers do not want to lose access to this market,” he added.
Magazine: The British Virgin Islands are a top crypto hub no one ever talks about: Here’s why
Be the first to comment