MiCA in Practice: Is Europe's Crypto Rulebook Working?

When the EU adopted the Markets in Crypto-Assets Regulation in 2023, it was hailed as the first comprehensive crypto rulebook of any major economy. The rules on stablecoins began to apply in mid-2024 and the rest at the end of that year. The promise was elegant: a crypto firm licensed in one member state could serve customers across the bloc, under common standards for capital, governance, custody and disclosure. More than a year into full application, the regime is working in some respects and straining in others. Its most important lesson may be that harmonized rules do not guarantee harmonized supervision.

What MiCA set out to do

MiCA covers three main areas. It regulates issuers of stablecoins, divided into e-money tokens linked to a single official currency and asset-referenced tokens linked to baskets. It sets rules for crypto-asset service providers, such as exchanges, brokers and custodians. And it imposes transparency requirements on issuers of other tokens through a white paper regime. Alongside it, the EU extended its funds-transfer rules so that crypto transfers carry information about sender and recipient, and a new tax directive requires service providers to report customer transactions from the start of 2026.

The regulation also included a transition. Firms already operating under national regimes could continue for a period, set by each member state, up to a maximum ending on July 1, 2026. That deadline is now close, and it is concentrating minds.

For firms that have not secured a license by then, the options are stark: obtain authorization, partner with a licensed entity, or stop serving EU customers. National authorities have reported heavy application volumes, and some have warned that incomplete or low-quality applications will simply be rejected rather than waved through. The end of grandfathering is therefore the first real test of whether MiCA shrinks the market to firms that can meet its standards, or whether supervisors, under commercial and political pressure, find ways to soften the landing. How that plays out will also shape how much trust larger member states place in licenses granted elsewhere.

The passport race

Because a MiCA license issued anywhere is valid everywhere, firms have strong incentives to seek authorization in the member state they expect to be fastest and most predictable. Several large global exchanges and fintechs obtained licenses in smaller jurisdictions with established crypto supervision, while others went to larger markets such as Germany, France or the Netherlands. The result is a licensing market in which national authorities compete, implicitly, for business and prestige.

That competition has drawn criticism. In 2025, the European Securities and Markets Authority published a peer review of one national authority's licensing of a crypto firm and concluded that its process only partially met expectations, noting gaps in how certain risks were assessed. Around the same time, regulators in some of the larger member states, including France, publicly questioned whether passported licenses from other countries should be accepted automatically, and suggested that the most significant firms should be supervised directly at EU level.

A single rulebook enforced by twenty-seven referees is still twenty-seven games.

Centralization on the agenda

The debate has moved from complaint to proposal. As part of a broader push toward deeper capital markets integration, the European Commission has put forward plans that would shift supervision of major crypto-asset service providers toward ESMA, alongside other market infrastructure. Supporters argue this is the only way to prevent regulatory arbitrage and to give the EU a single, credible counterpart for global firms. Opponents, often smaller member states with developed fintech sectors, argue that centralization would slow licensing, strip national authorities of expertise and push innovation elsewhere. The outcome will depend on negotiations among member states and with the European Parliament, which are likely to take time.

Stablecoins: the market MiCA reshaped

MiCA's clearest market effect has been on stablecoins. Tokens whose issuers did not obtain EU authorization have been delisted or restricted for European users on regulated platforms, which pushed trading volumes toward compliant alternatives. Euro-denominated e-money tokens have grown from a low base, helped by bank and fintech interest, though they remain small next to dollar tokens. A live technical and legal question concerns so-called multi-issuance, where the same token is issued by an EU entity and a non-EU affiliate. European supervisors have raised concerns about whether EU holders are adequately protected when reserves and redemption obligations span jurisdictions.

What MiCA does not cover

• Fully decentralized services without an identifiable provider.
• Most non-fungible tokens, unless they function like fungible assets.
• Crypto lending and staking, which remain partly outside the core framework.
• Prudential treatment of crypto exposures at banks, handled under separate rules.

These gaps are deliberate. The EU chose to regulate what it could define clearly and to revisit the rest. Reviews built into the regulation give the Commission a mandate to report on decentralized finance and other areas, which will likely lead to further legislative proposals.

A working model with a governance problem

By most measures, MiCA has achieved its first aim: crypto businesses in Europe now operate under a legal framework rather than a patchwork of national registrations. Consumer disclosures are more standardized, and stablecoin issuers face real reserve obligations. The unfinished task is governance. The EU has to decide whether a single market in crypto requires a single supervisor, and whether it is willing to accept the political costs of building one. How that question is answered will shape not only crypto, but the broader project of European capital markets integration. This article is analysis rather than investment advice.