New EU MiCA Rules Reshape Crypto Landscape, Raising Questions of Advantage

As Europe’s crypto regulatory regime fully takes effect, industry participants largely agree that regulation is now permanent, though they remain split on whether it primarily protects consumers or tilts the playing field toward larger firms.

The European Union’s crypto sector entered a new phase on Wednesday as the Markets in Crypto-Assets (MiCA) framework became fully operational. Under the new rules, any crypto company serving customers across the 27-member bloc must obtain authorization or cease operations.

Thousands of crypto service providers were forced to halt EU operations after the June 30 deadline, leaving millions of users searching for MiCA-compliant platforms.

While the rollout of a unified EU regulatory system has been widely welcomed by executives and legal experts, debate continues over its competitive effects. Some argue that steep compliance costs are pushing smaller firms out of the market and encouraging relocation to jurisdictions such as Dubai. Others believe the framework appropriately rewards firms that have prioritized transparency and strong governance. A major unresolved question is whether regulators can effectively prevent offshore platforms from continuing to serve EU users without authorization.

Joseph Borg, a Maltese lawyer and partner at WH Partners, said European-level regulation is a positive development, noting that “Regulation is necessary.”

However, he argued that enforcement is now the main challenge, rather than the law itself, and warned that supervisory capacity may be stretched. He estimated MiCA could reduce Europe’s crypto service providers from roughly 3,000 to about 300–400 licensed firms.

Borg also suggested regulators may prefer managing a smaller, more controlled group of firms instead of investing in the infrastructure needed to oversee a larger market.

On competitiveness, he said rising compliance demands naturally favor firms with greater legal and operational resources. While MiCA is not explicitly designed to favor large players, he argued its technical and supervisory requirements create higher barriers for startups.

Others disagree. Alex Fazel, chief partnership officer at SwissBorg, said MiCA licensing is less about size and more about proving operational transparency.

“Transparency is key,” Fazel said. “You cannot build trust without transparency.”

SwissBorg secured its MiCA authorization through France’s financial regulator this year, a process Fazel said required detailed disclosure of governance, compliance, and operational systems.

He emphasized that licensing cannot simply be purchased through financial strength alone. “A MiCA license is not something you can buy because you have money and power,” he said.

Still, Fazel acknowledged that startups face the toughest conditions, as compliance costs and regulatory requirements may limit innovation for smaller players.

For regulated exchanges, enforcement against offshore platforms remains a key concern. Lin Han, CEO and founder of Gate Group, said compliant firms have long prepared for MiCA, but the framework only works if all participants follow the same rules.

“Everybody needs to follow the rule,” Han said. “Then we can compete on better service for users.”

The European Securities and Markets Authority (ESMA) has warned that unlicensed firms serving EU customers are in violation of EU law and must stop offering services. It has also discouraged “reverse solicitation” and encouraged measures such as geo-blocking to restrict access.

However, Han questioned whether regulators have sufficient capacity to prevent offshore platforms from continuing to serve EU users.

“If unregulated or unregistered platforms can still provide services, then it’s not a level playing field,” he said.

Despite differing views, all three agreed that crypto regulation in Europe is here to stay. Borg said MiCA has strengthened relationships between banks and crypto firms, while Han noted that Europe remains too important a market for global exchanges to ignore despite higher compliance costs. Fazel added that stronger oversight improves consumer protection by increasing accountability and legal recourse.

“I really see regulators as a net positive for the industry,” Fazel said. “They’re here to verify.” Borg concluded that MiCA’s rollout reflects the maturation of crypto, noting the sector has grown too large to realistically ban or suppress.