MiCA Takes Full Effect: Europe's Crypto Rules Begin

The Markets in Crypto-Assets regulation went fully live across the European Union on July 1. Crypto asset service providers that missed the authorization deadline now face restrictions or penalties in member states where they operate. The transition period that began in 2023 is over.

Peter Kerstens, an adviser to the European Commission and one of MiCA's principal architects, told CoinGape the regulation's biggest impact is not on stablecoins – the usual focus of public debate. "Personally, and this is my personal view, I think that the parts in MICA that deal with crypto asset service providers are actually much more important," he said. Most users interact with exchanges, custodians and brokers, not with issuers. Bringing those businesses under common prudential and conduct rules creates trust, he argued.

Kerstens pointed to MiCA's core achievement: moving digital assets "from a bit of a shadowy environment into the regulatory sunlight." The framework, drafted in 2018-19, was written for a market that no longer exists. "When MiCA was designed, there were no NFTs. When MiCA was designed, there were no meme coins. When MiCA was designed, there were no perpetual futures."

The European Commission has already opened a consultation to assess whether MiCA needs updating. Kerstens said the goal is to keep the rulebook "fit for purpose" and to reflect market realities, including regulatory developments outside Europe. Legislative changes take two to three years, so the review must start now. He emphasized the consultation is not a signal that MiCA has failed. "MiCA is working very well," he said.

Tokenization is the area Kerstens sees as the biggest long-term opportunity. "Everything will end up being tokenized," he said, pointing to inefficiencies in clearing, settlement and capital use in current financial markets. He expects the shift to take five to ten years, not one or two. The financial centres of this tokenized world, he predicted, will be in Asia – India, China and Southeast Asia – where the dynamic is "so much more powerful" than in Europe. "In Europe and the US, we have to be extremely vigilant of this because otherwise we are no longer going to be the financial centres of the world."

Kerstens also urged market participants to stop using regulation as an excuse for inaction. "If people say, look, we can't do this because Article X, Y and Z of that regulation prevents it, they have to come forward and tell us," he said. He encouraged firms to demonstrate the specific provisions that block innovation.

The "Brussels Effect" – Europe's ability to set global regulatory standards through consensus across 27 countries – is already visible, according to Kerstens. "We see MiCA being emulated across the world," he said.

For crypto firms operating in Europe, the immediate risk is enforcement action against unauthorized entities. The European Securities and Markets Authority (ESMA) has published a list of national competent authorities and expects member states to act on non-compliant firms. The consultation on MiCA's next version will run through September, with a legislative proposal possible in 2027.