The European MiCA Act is about to be implemented. What impact will it have on the market?

Original text:Cryptonews

Compiled by: Yuliya, PANews

As 2025 approaches, the European cryptocurrency market is about to undergo major changes. Although global attention often focuses on the development of the US market, the development trend of the European market in the next year also deserves special attention. Especially as the high-profile Cryptoasset Market Regulation Act (MiCA) will be fully implemented across the EU on December 30, 2024, the market landscape will change significantly. The introduction of this bill has had a major impact on the stablecoin market, especially when there have been many doubts about USDT in the market recently. In response, Tether CEO forwarded multiple clarifications on social platform X, emphasizing that the reality is that USDT will not be deemed illegal in Europe.

'Major changes' ahead

Marina Markezic, co-founder of the European Crypto Initiative (EUCI), said that the implementation of MiCA will prompt EU member states to compete to become the most attractive business and investment destination. She pointed out:

“Jurisdictions that can efficiently adopt MiCA (EU Crypto-Asset Market Regulation Act) and provide a business-friendly environment are expected to become important cryptocurrency centers, with Germany and France being strong contenders. At the same time, Estonia, Malta or Portugal, etc. The country may also leverage its flexible regulatory processes and competitive tax policies to attract global players."

Markezic explained that MiCA provides a unified regulatory framework through a "license passport" system that allows companies to operate within the entire trade area after obtaining regulatory licenses in a member state. EUCI expects that Europe will form a "more mature and regulated cryptocurrency market" by 2025, providing legal certainty and confidence to institutional and retail investors, while promoting the adoption of blockchain technology.

“Retail participation has improved recently due to the rally in the cryptocurrency market. The approval of ETFs, as well as the change in the U.S. administration, has brought optimism to investors. Nonetheless, given the market’s historical volatility, we believe most crypto Retail currency investors remain cautious."

Erald Ghoos, general manager of OKX Europe, believes that 2025 will be a critical year for the transformation of the cryptocurrency industry, especially in the European region.

“Bitcoin’s recent all-time highs are a strong indicator of the growing trust and attention the digital asset is receiving. This rally, coupled with the impending implementation of MiCA regulations in Europe, marks a pivotal moment for the industry, bringing provides a much-needed framework that promises greater clarity, security and stability.”

MiCA challenges

While MiCA is considered a step in the right direction, EUCI's Marina Markezic predicts the regulation could cause "quite a bit of confusion" in its implementation. She pointed out that because the EU's 27 member states may interpret regulations differently, this will lead to challenges in regulatory consistency.

“There is also considerable uncertainty when it comes to determining which projects and assets fall under MiCA’s regulatory scope, especially as there is still debate over what can be considered “fully decentralized.” Additionally, the industry’s definition of NFTs There is no consensus yet, which also leads to ambiguity about whether some tokens are regulated by MiCA.”

Markezic said that this is important because the new regulations require projects to prepare white papers before publicly issuing tokens, which may increase the difficulty of compliance for small projects and emerging plans, thereby inhibiting innovation. In addition, EUCI predicts that a large number of tokens may be delisted by centralized platforms due to their inability to meet regulatory standards. This change may lead to a reduction in the types of stablecoins available to retail investors on exchanges, thereby affecting market liquidity and accessibility.

In addition, she predicted that MiCA may accelerate the institutionalization and integration of the EU encryption market, promote mergers and acquisitions between traditional finance and crypto-native companies, and may cause some companies or products to exit the market. Although MiCA largely excludes DeFi from direct regulatory scope, its interfaces or service access points may face additional supervision from member states, and this uncertainty may cause friction. ( Related reading )

Europe’s Bitcoin Strategic Reserve

EU member of Parliament Sarah Knafo recently proposed the establishment of a Bitcoin strategic reserve in Brussels, saying that the move could emulate Trump's policies and warned that the launch of a digital euro could lead to a "dystopian world." Markezic said the idea was innovative but controversial in the EU's conservative financial environment. She believes that this proposal needs a comprehensive discussion, focusing on analyzing its potential benefits and risks, especially the strategic importance of Bitcoin and other crypto-assets, and the EU’s positioning in global competition.

The MiCA regulations introduced by the European Union had been seen as key to attracting crypto companies, especially in the context of regulation through enforcement by the United States Securities and Exchange Commission. However, with Trump set to return to the White House and promising a looser environment for the crypto industry, the EU’s appeal may be affected.