MiCA—Europe’s Markets in Crypto-Assets regulation—has achieved something the industry had long struggled to secure: a single, coherent rulebook across the EU and European Economic Area. With that framework now in place, the focus is shifting from building the system to stress-testing it through its scheduled review.
As the consultation on MiCA’s review closes on Sept. 30, the central question for investors and providers is how well the rules match the risks they are designed to curb—especially as compliance requirements have grown. The review will determine whether the market stays attractive for new entrants and innovation or gradually becomes too costly to compete in.
Key takeaways
- MiCA created the EU’s first unified crypto rulebook, enabling passporting of authorized crypto services across Member States.
- Passporting is a core economic advantage, turning previously fragmented markets into a larger addressable customer base.
- Proportionality is the guiding standard: obligations should track real risks to customers and market integrity.
- Compliance costs have risen, with fixed costs weighing most on smaller firms and new entrants.
- The review should simplify requirements that add burden without clear risk-reduction benefits.
What MiCA changed: from patchwork rules to a single passport
Before MiCA, firms attempting to operate across Europe faced a patchwork of national requirements. In some jurisdictions there were bespoke regimes; in others, the regulatory landscape was less clear or not tailored to crypto at all. For businesses, that meant repeated authorizations, differing compliance setups, and uneven market access.
MiCA’s most consequential feature is authorization passporting: a crypto asset service provider (CASP) authorized in one EU Member State can offer services across the EU and EEA under a common framework. This not only reduces duplication for providers; it also increases choice for customers by allowing them to select among multiple licensed and supervised institutions.
According to the European Commission’s stated review process, the consultation on the functioning of EU crypto-assets rules is open while Member States assess how the regime is working in practice. The industry’s review challenge, therefore, is whether the obligations required for market access remain proportional to the scale of the single market that passporting opens up—an addressable population often described in the industry as around 450 million people.
Regulate the risk—not the label
A recurring principle highlighted for MiCA’s review is that regulation should follow risk. Services that involve client money, custody of assets, threats to market integrity, or potential impacts on financial stability are precisely where robust rules and supervisory attention are warranted.
But over time, regulatory systems can accumulate requirements—additional reporting, documentation, and procedures—that may increase costs without delivering meaningful risk reduction. The argument for the MiCA review is therefore not to remove oversight, but to make sure every requirement still earns its place.
In other words, the review should be a discipline: keep rules that clearly reduce materially relevant risks, and simplify, streamline, or remove requirements that do not.
The compliance cost curve: where the burden may be growing faster than the benefit
Even proponents of strong regulation acknowledge that MiCA has raised the barrier to entry. The key issue is how that cost plays out across the market.
Compliance overhead tends to hit hardest on smaller firms and newer entrants. These players compete on agility, customer focus, and innovation—yet fixed authorization and ongoing compliance costs can become large enough to change competitive dynamics. When the cost of participation rises, the single market’s promise of broader choice can weaken as fewer firms are able to build, scale, or enter.
The risk for policymakers highlighted in the discussion is cumulative: if the review adds further burden without a clear risk-based justification, the result is less likely to be a safer market through better controls, and more likely to be a smaller market with fewer firms operating under EU supervision.
Because digital asset businesses can be comparatively mobile, the compliance trajectory could also affect where new investment is directed—potentially shifting incremental activity toward jurisdictions with similar access but lower friction. That would leave European consumers with less provider choice and reduce the share of global activity overseen by EU regulators.
What “good” looks like in the MiCA review: proportional tiers, clearer overlaps, and smarter reserves
The case for the review centers on proportionality rather than deregulation. Supporters of this approach argue that the consultation should be used to scrutinize obligations that generate substantial cost without corresponding risk reduction, while ensuring room for innovation within the bounds of supervisory goals.
Several concrete examples have been cited as areas where proportionality could better align costs with risk:
- Tiered regulation based on size and risk: a smaller startup with limited client reach should not face the same compliance burden and prudential requirements as a large multinational managing substantially larger assets. Risk-based tiers—potentially grounded in asset volume, client base, or systemic relevance—could lower barriers for emerging players while maintaining stricter oversight for firms where the impact of failure is larger.
- Reducing overlap for e-money tokens: custody and transfer of e-money tokens (EMTs) can trigger additional frameworks, including the Payment Service Directive (PSD2), on top of MiCA licensing. The concern is duplicative compliance and legal uncertainty where the consumer-protection benefit may not justify multiple layers. A clearer delineation—or a single-license pathway—would aim to preserve supervision while cutting unnecessary friction.
- More flexible reserve requirements for stablecoins: the discussion highlights that stablecoin issuers are required to hold at least 30% of reserves as bank deposits. In a higher-rate environment, that structure can limit potential yield. In stress scenarios, concentrating assets in bank deposits may elevate counterparty concentration risk. A more flexible approach to reserve allocation—allowing high-quality liquid assets beyond bank deposits—could potentially strengthen resilience while preserving redemption capacity.
These points share a common theme: the goal is a MiCA framework that stays credible to users while remaining workable for firms that keep the market functioning.
What to watch next
As the MiCA review consultation closes on Sept. 30, market participants should watch how regulators translate proportionality into concrete changes—particularly whether the final direction reduces duplicative costs, maintains strong oversight where risks are highest, and preserves EU market attractiveness for both established providers and new entrants.
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