As the European Commission’s consultation on the review of the Markets in Crypto-Assets Regulation, or MiCA, comes to a close, Europe is facing a sharper question: is its crypto rulebook protecting the market without making it too expensive to build in the region?
When MiCA took effect, it achieved something Europe’s digital asset sector had lacked for years: a single, coherent set of rules.
For the first time, a crypto-asset service provider, or CASP, authorized in one member state can passport its services across the European Union and the European Economic Area. Clients across the bloc can choose from a growing pool of licensed and supervised providers. The article describes that as a real achievement, and one the industry should not treat as a given.
With the review consultation closing, the discussion now turns to calibration: keep what works, and be candid about where compliance obligations have expanded faster than the risks they were meant to address.
The case for a unified market
The article starts with what MiCA got right. Before it, a firm trying to operate across Europe had to deal with a patchwork of national regimes, different registration requirements and, in some jurisdictions, no dedicated framework at all.
A unified market changes the economics of building a serious business. Providers can invest in one authorization and one compliance architecture instead of 30. Customers also gain something tangible: a wider field of providers competing on quality, price, service and security under a common standard.
Passporting is the mechanism that turns 30 fragmented markets into one addressable market of about 450 million people. The article calls that the strongest reason for a globally mobile industry to build in Europe rather than elsewhere.
The European Commission’s consultation on MiCA’s review closes on Sept. 30.
MiCA has raised the barrier to entry by imposing a more demanding authorization and compliance framework. In exchange, an authorized CASP gains access not just to one member state, but to the entire EU single market.
That makes the central review question fairly direct: are the obligations tied to market access still proportionate to the scale of the market they unlock?
Regulation should follow risk
The article says the review should be guided by a simple principle: regulation should apply where there are real risks to market participants or to market stability, and it should be proportionate to those risks.
Where a service involves client money, custody of assets, market integrity or financial stability, strong rules are not only acceptable but necessary. That is where supervisory attention belongs, and, in the article’s view, where the industry has the least ground for complaint.
Compliance frameworks, it argues, should ultimately be judged by one test: do they meaningfully reduce risk?
Over time, regulatory systems tend to accumulate rules, reporting requirements and documentation duties. Complexity and cost rise, but the reduction in risk does not always rise with them.
For that reason, the review should challenge every requirement and keep only those that address a clear and material risk. Rules that meet that standard should remain. Rules that do not should be simplified, streamlined or removed. The article says proportionality is not a loophole; it is what keeps a rulebook credible.
Compliance costs are rising, and smaller firms feel it first
The article states plainly that compliance costs for CASPs have increased significantly under MiCA. It does not present that fact, by itself, as a criticism. Part of that cost is the price of admission to a large and valuable market, and a well-run firm should be ready to bear it.
Still, cost is not neutral at the market level.
Compliance overhead hits smaller firms and newer entrants hardest, even though those are often the companies that drive competition and innovation. Once the fixed cost of authorization climbs high enough, it stops acting as a safeguard and starts acting as a barrier to entry. That can entrench incumbents and narrow the range of choices the single market was supposed to expand.
The article says the real risk is not any one rule in isolation, but the cumulative direction of travel. If the review materially adds to the regulatory burden without a clear risk-based justification, the likely outcome is not a safer market but a smaller one, with less innovation and fewer firms willing to build in Europe.
Digital asset businesses are unusually mobile. Some may gradually direct new investment to jurisdictions that offer similar market access with lower friction. If that happens, European consumers get less choice, while European supervisors oversee a smaller share of a global activity that continues anyway.
What the article says a good review would look like
The piece does not argue for deregulation. It argues for a review built around proportionality: use this moment to examine requirements that generate cost without a matching benefit, leave firms room to innovate and build, and ask at each step whether a given obligation is protecting the market or merely taxing it.
It gives several examples.
Tiered regulation by size and risk
A small startup with only a handful of clients should not face the same compliance burden and prudential requirements as a multinational company managing billions of dollars in assets, the article says. A tiered framework based on asset volume, client base or systemic relevance could lower barriers for emerging firms while preserving strong oversight where it matters most.
Dual licensing for e-money tokens
For e-money tokens, or EMTs, custody and transfer can trigger additional regulation such as the Payment Services Directive, or PSD2, on top of MiCA licensing. The article says that overlap creates duplicative compliance costs and legal uncertainty without a clear consumer protection gain. A clearer boundary, or a single-license pathway, would reduce friction while keeping supervisory coverage in place.
Rigid reserve rules for stablecoins
The article also points to reserve requirements for stablecoin issuers. Issuers must hold at least 30% of reserves as bank deposits. In a rising-rate environment, that limits yield opportunities. In a banking crisis, it concentrates counterparty risk. A more flexible allocation framework that allows high-quality liquid assets beyond bank deposits could, in the article’s view, improve resilience without weakening redemption capacity.
The next step for MiCA
The article closes by saying Europe has built something unusual: a large, unified and credibly regulated crypto-asset market. The task now is to keep it attractive to the firms that make that market work.
Getting that balance right, it says, is in the interest of both regulators and the industry, and the coming months are the period in which that calibration needs to happen.