After the end of the transition period on 1 July, the European Union Code on Encrypted Asset Markets, MiCA, entered the full implementation phase, and has not completed the encryption asset service provider of the formal licence application and cannot, in principle, continue to operate within the EU. At the same time, the European Commission has begun to assess whether the encryption regulatory framework needs to go into the next round of revision.

End of transition period

The European Commission initiated consultations in May, and the central question is whether the current design of the MiCA remains relevant in the context of the rapid development of stable currency and asset monetization. The MICA was drafted from 2020 to 2023, when the focus of regulation was mainly on exchanges and other encrypted asset service providers, and the focus of the market has now clearly shifted to stable currency payments and chain financial applications.

  • EU Commencement of MiCA Applicability consultation in May
  • 1 July
  • Unlicensed institutions have to stop operating in the EU

It's a revised focus.

The Stable Currency is considered to be one of the parts of the MICA that needs to be revisited. At the time of drafting, the stabilization currency had not been as deep in cross-border payment and settlement as it was today, and the existing rules were therefore more cautious than new approaches in markets such as the United States.

The report mentions that the MiCA has approved about 20 euro stabilization notes, which indicates that formal regulation has facilitated, to some extent, the landing of products. However, marketers also pointed out that the minimum bank deposit requirements in the reserve rules could reduce the efficiency of the use of the stable currency.

Cross-border recognition and tokenization

Another direction discussed was whether to establish an equivalent mechanism for third States. If the EU recognizes some of its extraterritorial regulatory frameworks in the future, it may open up space for stable currency in global circulation to enter EU trading platforms and reduce the fragmentation of rules between jurisdictions.

In addition to the stabilization of currencies, the European Commission is also concerned about the extension of chain finance to broader asset monetization. According to legal sources, the EU does not currently explicitly prohibit multiple distribution structures, but the regulatory hierarchy is considering strengthening foreclosure to reduce the impact on users of sudden tightening of cross-border liquidity.

As a whole, MiCA did not enter the static phase as a result of its full entry into force. With the expansion of the stable currency and monetization markets, the EU encryption rules are entering a new phase of implementation and revision.