The topic of multi-jurisdictional regulation of digital assets is now more important than ever. The fact is that US authorities are now actively creating problems for cryptocurrency companies by banning them from issuing various tokens and actively issuing multi-million dollar fines. What is particularly unpleasant is that such penalties have been applied for the actions of market participants in the past.

The latter are unaware of potential violations because there is no adequate regulatory framework for cryptocurrencies in the US – instead, digital assets are regulated using securities regulations created decades ago.

Naturally, such an environment does not suit developers, so they are looking for new locations to operate. The most recent example of such was the crypto-exchange Coinbase, which received a license to operate from Bermuda the day before. This will allow the company to launch a new trading platform with support for derivatives, which are mostly banned for regular investors in the US.

So it now comes down to which jurisdictions will impose more adequate regulations. The latter will be precisely what will attract developers.

How cryptocurrencies are regulated in Europe

The adoption of MiCA should significantly increase European big investors’ interest in digital assets, as well as attract development teams seeking regulatory certainty. Patrick Hansen, director of EU strategy and policy at Circle, said in an interview with Cointelegraph journalists that MiCA will allow European cryptocurrency firms to scale and grow faster. Here’s the relevant rejoinder, in which the official shares details of what’s happening.

The legal clarity will also encourage innovation among financial institutions that were previously hesitant to launch blockchain-based products and services due to regulatory uncertainty.

That is, the expert makes it clear that the adopted regulations will not only attract blockchain developers, but will also allow various payment-related companies to link to decentralised assets. Accordingly, in theory, users of the latter can expect faster payments and lower transaction fees.

Moritz Schildt, a board member of the Hanseatic Blockchain Institute, sees the biggest benefit of MiCA as the fact that the bill “will come into force as early as this year. That is, there will soon be a single framework for regulating digital assets across the EU, greatly enhancing Europe’s ability to compete for innovation.

What’s more, the EU could become a new hub for crypto start-ups thanks to a legal framework. The US has long been the main hub for cryptocurrency companies, but due to heavy pressure from local regulators on the industry, even US platforms are considering moving their business overseas. At the same time, the actions of regulators are also actively criticized in the US Congress.

This view is shared by Peter Grosskopf, co-founder of DeFi-platform Unstoppable Finance. The fact that companies now only need to be licensed in one EU country will be an important factor when choosing a new location for the same US start-ups.

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Overall, the MiCA provides a solid framework that builds confidence in the digital asset industry through legal certainty. This includes a uniform classification of cryptocurrencies and a requirement for coin issuers to provide a whitepaper disclosing all relevant information about their projects, as well as informing about cryptocurrency-related risks.

According to analysts, the next big issue on the agenda of European policymakers will be to develop similar rules exclusively for the unique token (NFT) sphere.

NFTs are significantly different in nature from “traditional” cryptocurrencies. They can be used in a huge number of familiar areas, from digital IDs to art objects. NFTs therefore need their own specific rules, and this is the right strategy for the EU.

Some aspects of MiCA have yet to be finalised in upcoming technical standards and guidelines. For example, it concerns liquidity requirements for token reserves, i.e. their collateral. In this way, the authors of the bill want to prevent possible crashes of cryptocurrency projects in case of mass token withdrawals – this primarily concerns USDT and USDC-type stabilecoins. Well, it is unlikely that algorithmic stablcoins without Dai-type collateral will be able to work adequately in the EU.

EU regulators will reportedly develop these standards over the next 12-18 months. In addition to MiCA, the EU is also finalising a new set of anti-money laundering (AML) regulations, which will be "critical for cryptocurrency firms".

Another important point in the new legislative framework is the revision of PSD2, the main EU payments directive, which will have a significant impact on digital currency start-ups. Finally, in about 18 months the European Commission will publish a detailed report on decentralised finance and may take further legislative steps to regulate DeFi protocols.

Separately, centralised cryptocurrency platforms like exchanges will have to report on transactions by users who withdraw the equivalent of more than a thousand euros into personal non-custodial wallets. Accordingly, if a user sends a relatively large amount from an exchange to his or her own or someone else's cold wallet, he or she will be required to report the recipient's details, including the country of residence and purpose of the transfer. In this way, the authorities want to combat the funding of illegal activities, although in theory this is more like an additional control tool, as it would be relatively easy to circumvent this feature by splitting up the transfers if desired.

Binance cryptocurrency exchange founder Changpen Zhao has also reacted to what is happening. Here’s his rejoinder from Twitter.

The European Parliament has voted to implement MiCA.

This means that one of the world’s largest markets is introducing well-defined rules for cryptocurrencies for the sake of protecting users and supporting innovation.

Little things will matter, but overall we see this as a pragmatic solution to the problems we all face. There are now clear rules of the game for crypto exchanges that operate within the European Union. We are ready to implement the necessary changes in our business over the next 12-18 months to fully comply with the new regulations.

In any case, there is still a lot of work ahead for politicians and blockchain experts, but the adoption of MiCA will provide a good foundation for the development of crypto within the EU. This is a long-term consideration, which is why the crypto market has not yet reacted to the published news.


We believe that such a move by the EU authorities is extremely positive. Of course, some things will have to be added and corrected, but having a regulatory framework for digital assets is in any case a plus for developers. What's particularly nice is that MiCA will allow developers to be licensed in one country and choose another country to operate in. So we can assume that some companies will indeed move to Europe given the legislative certainty.