Regulation
How Cryptocurrency Firms Are Profiting From MiCA’s Uneven Rollout – DL News
- The MiCA licensing regime will be put into operation at the end of December.
- Countries will have different levels of stringency.
- This will create opportunities for businesses to compare offers.
Stablecoin laws have already come into effect, but EU countries are racing to comply with the rest of the bloc’s new cryptocurrency regulations ahead of deadlines.
The EU regulatory framework requires cryptocurrency businesses, such as exchanges, to choose a country in which to apply for a license. In practice, countries will inevitably have different levels of stringency.
The crypto-asset market regulation has been designed to introduce a level playing field across the EU, as national regulators will have to adhere to the same set of standards. Once licensed, crypto-asset service providers, or CASPs, can issue passports for their services anywhere in the Union.
Countries are also allowed to opt for longer transition periods before applying the MiCA rules. This is known as a grandfathering period.
“All this can call into question the level of compliance in some countries.”
— Ernest Lima, XReg Consulting
This creates opportunities for cryptocurrency businesses to seek out jurisdictions with lighter rules and less enforcement capacity, said Ernest Lim, partner at consultancy XReg. DL News.
“Cryptocurrency businesses registered or authorised in different EU member states may be subject to different requirements” between January 2025 and July 2026, Lima said.
Due to time and capacity constraints, some local regulators may struggle to review applications in time for the deadline, he added.
“Some may not even have sufficient resources to adequately supervise licensed CASPs,” Lima said.
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“All this can call into question the level of compliance in some countries.”
Companies are already taking advantage of the uneven way MiCA regulation is being rolled out across the EU, in a practice known as regulatory arbitrage, Lima said.
Just the beginning
MiCA’s stablecoin laws came into effect on July 1, marking the start of the rollout.
The next phase is MiCA’s licensing regime for crypto businesses – including exchanges, custodians and investment firms – which will come into effect on December 30.
Although the new rules will be stricter, CASPs registered in one country are allowed to offer their services across the EU27 under MiCA’s ‘passporting’ provisions.
Some countries with simpler registration requirements already have a significant number of VASPs on their registers.
Lima said he expects to see the number of CASPs in Europe consolidate significantly, and particularly in these countries.
In countries where regulators are less strict, companies can use a relatively simple registration process to gain access to Europe.
Lithuania, for example, has 588 VASPs, compared to 12 in Germany, according to XReg data.
Transition period
The MiCA grace period will also impact where companies apply for licenses, Lima said.
The grandfathering period is a transition that begins on December 30 and during which companies can move to the stricter CASP regime.
Countries can grant cryptocurrency businesses up to 18 additional months from December 30, although the EU’s financial markets watchdog recommends a 12-month grace period.
In assessing how long it will take for companies to transition to the CASP regime, countries will have considered “their internal readiness to process applications, the gap between MiCA and their existing regime, and the number of companies currently registered in their jurisdictions – all factors that influence the workload associated with the transition,” Lima said.
Some countries have announced their transition, while others have not, he added.
Among those who announced:
- France will allow an 18-month implementation period. The country already has a regime similar to that of MiCA.
- Many countries — including Ireland, Germany, Spain and Austria — are opting for the recommended 12-month transition.
- Lithuania, which has light anti-money laundering requirements and a large number of registered VASPs, has been on a work stoppage for five months.
- The Netherlands will implement the MiCA scheme on 30 December and is already accepting applications.
Strategies
Cryptocurrency companies are considering different strategies to take advantage of the uneven rollout, Lima said.
Some companies want to comply as quickly as possible – by December 30 – which means they will be the first to gain passporting rights and capture market share in the EU.
“Others choose to advance multiple claims in EU jurisdictions,” he said.
This approach allows a company to benefit from a transition period in a reputable jurisdiction while it works on a MiCA application.
However, time is running out, he said: local regulators are preparing to launch the MiCA application process.
“Soon there will be no more time to process new requests.”
Some companies have no intention of complying with MiCA, Lima said.
Instead, they choose to continue operating as long as they can before shutting down their operations.
Contact the author at joanna@dlnews.com.