The EU is in the process of implementing the Markets in Crypto-Assets (MiCA) regulatory framework. The new law has brought about a unified rulebook for stablecoins and crypto-asset service providers (CASPs) across Europe and set standards beyond.
Although MiCA was passed in 2023, the full regulation only took effect in December 2024. The law is now in a transition period that ends at the end of this year.
The crypto industry has lauded the framework as a huge positive for Europe. Taking to social media after the bill passed, Binance founder Changpeng “CZ” Zhao praised it as a pragmatic solution. “Overall, we think this is a pragmatic solution to the challenges we collectively face. There are now clear rules of the game for crypto exchanges to operate in the EU,” he said on X.
A Uniform Rulebook for a Fragmented Market
Before MiCA, the EU had inconsistent regulations on the crypto industry. Each nation had its own framework, with some, like Germany, being very stringent while others, like Malta, were very crypto-friendly. This made it harder for companies to operate across borders.
“Today, we put order in the Wild West of crypto assets and set clear rules for a harmonised market that will provide legal certainty for crypto asset issuers, guarantee equal rights for service providers and ensure high standards for consumers and investors,” said Stefan Berger, the MEP who led the negotiations.
Crypto-asset service providers can now obtain a licence from any EU nation. Once they do that, they can then “passport” their services throughout the bloc.
How MiCA Changes the Rules for Crypto Businesses
While MiCA has streamlined the licensing process for crypto-asset service providers in Europe, issuers now face stringent requirements. They must have adequate capital, implement consumer protections, and, in some cases, maintain a physical presence within the EU.
In the European Council press release after the regulation was passed, the French Minister for the Economy, Finance, and Industrial and Digital Sovereignty, Bruno Le Maire, emphasised its balance between protecting consumers and encouraging innovation.
“MiCA will better protect Europeans who have invested in these assets, and prevent the misuse of crypto-assets, while being innovation-frieassets and maintain the EU’s attractiveness,” he said at the time.
Additionally, issuers of asset-referenced tokens (ARTs) and Electronic money tokens (EMTs) are now under the supervision of the European Banking Authority (EBA).
But the key issue CASPs have taken with MiCA has been the requirement to keep 60% of their reserves in European banks. While the aim is to make stablecoins safer, many in the crypto industry say it will make issuers heavily reliant on traditional banks.
Paolo Ardoino of Tether suggested the regulation would make stablecoins more fragile, saying it’s safer to keep reserves in US treasuries. He also viewed the idea of a digital euro with suspicion, saying it’s a threat to privacy.
Tether has since left Europe after refusing to comply with MiCA requirements. Its main competitor, USDC, managed to become MiCA compliant, along with tens of other stablecoins.
Implementation Deadline Looms Large
MiCA’s phased rollout has given both regulators and issuers time to adapt. After a years-long process, the broader framework will take effect in December 2025.
However, some non-compliant companies will still continue operating after the deadline, thanks to the 18-month grace period. This grandfathering period applies to companies that are already compliant with their nation’s regulator, but they won’t be able to “passport” their services to the rest of the EU.
So far, the EU has approved multiple issuers, including Circle (EURC/USDC), Crypto.com (USD1), Membrane Finance (EURe/eUSD), and Société Générale – Forge (EURCV).
In particular, Circle’s compliance is a major win for crypto investors. Its stablecoin, USDC, is one of the largest stablecoins in circulation today, with a $75.48 billion market cap.
European traditional banks have also entered tokenised finance under MiCA, with French banker Société Générale – Forge leading the way.
Stablecoins Under the Microscope
Although MiCA was already in development before the collapse of TerraUSD, its final shape was heavily influenced by the same. Within a few weeks, the stablecoin wiped out around $500 billion from crypto markets, causing regulators to take notice.
MiCA now imposes strict reserve, redemption, and reporting requirements on issuers to prevent a similar collapse. One of the ways that the European Central Bank (ECB) has gone about this is to limit the dominance of foreign-denominated stablecoins.
In a July 2025 report, the ECB warned that the use of stablecoins was “reshaping global finance with the US dollar at the helm. Without a strategic response, European monetary sovereignty and financial stability could erode.”
Under MiCA, any issuer of a stablecoin pegged to a non-EU currency faces transaction limits within the EU. That provision has affected the USDC, the largest dollar-backed stablecoin still in operation in the EU.
The Broader Regulatory Ecosystem
MiCA focuses on stablecoins and not the crypto industry as a whole. For example, the regulation doesn’t cover decentralised finance (DeFi) and non-fungible tokens (NFTs). However, the European Commission has already signalled a “MiCA 2” proposal that will likely address these assets.
In addition to MiCA, the EU has also passed another piece of legislation meant for the crypto market but addressing money laundering. The Anti-Money Laundering Authority (AMLA) began work in July 2025 and is pushing crypto exchanges to provide better transparency and report suspicious activities.
The law has been met with widespread condemnation in the crypto industry. The EU’s Anti-Money Laundering (AML) law will ban tokens that are geared towards anonymous crypto accounts starting in 2027.
Looking Ahead
If implemented effectively, MiCA could help bring crypto assets into mainstream finance. The law already enhanced investor confidence by removing fraudulent and unregulated stablecoins from the market. It has also attracted mainstream institutions, with many banks across Europe setting up crypto services and even developing a token infrastructure.
However, as is always the case with different regulations, the implementation goes beyond the details to how the rules are enforced, interpreted, and updated.
