The EU Regulation on the Regulation of the Encrypted Assets Market is fully in force. As of midnight on 30 June, an encrypted company providing services to clients in the 27 countries of the European Union must hold a MiCA licence plate or cease its operations. With the end of the transition period, the European encryption market entered the phase of uniform regulation.

Holder requires full landing.

This means that a large number of platforms previously registered but not yet licensed by the MiCA are at risk of suspending their activities in the EU. Marketers said that European users would then shift more to approved platforms and that the pattern of industrial competition would be adjusted accordingly.

It was widely felt by lawyers and trading platform executives that MiCA had brought at least the uniform rules that had been missing for years. For companies operating across borders, a single framework helps to reduce institutional differences among member States and makes the cooperation between banks and encrypted enterprises more grounded.

Compliance costs become the main point of disagreement

The dispute focused on the costs of implementation. According to Joseph Borg, a Maltese lawyer who has been providing legal services to encryption companies for a long time, regulation is necessary in itself, but the real problem lies in the manner in which it is implemented and in the continuous raising of the compliance threshold. He estimates that there are about 3000 registered encrypted asset service providers in Europe, and that eventually only 300 to 400 will have a MiCA license.

In his view, this trend would benefit large, more well-resourced companies, which would be more difficult for start-ups to bear the costs of law enforcement, compliance and operational disclosure, and some of them might be diverted to other jurisdictions, such as Dubai.

However, there is also a divergence of views among the industry. According to Alex Fazel, Chief Cooperation Officer, SwissBorg, the core of the MiCA licence is not the size of the company, but whether it is clear whether the governance structure, the compliance process and the operations are transparent. SwissBorg has been licensed this year through the French Financial Markets Regulatory Authority by the MiCA.

Law enforcement on offshore platforms remains to be observed

In addition to the holding threshold, another focus will be on the ability of the EU to effectively limit the ability of unauthorized offshore platforms to continue to serve European clients. The founder and CEO of the Gate Group, Han Lin, stated that the platform had been ready for MiCA for many years, provided that all participants complied with the same set of rules.

The European Securities and Markets Authority (ESMA) has previously stated that companies that continue to provide services to EU clients without the authorization of the MiCA are in violation of EU law. The Agency also warns enterprises against relying on “reverse outreach” to continue to serve European clients and encourages measures such as geographical closures to restrict access.

However, the market remains concerned about the adequacy of regulatory resources to identify and deter off-shore platforms from continuing to reach EU users. If unlicensed platforms are still operational, it will be difficult to truly achieve the “fair competition” highlighted by the compliance exchange.

Overall, the attitude of the industry towards the MiCA is not against regulation, but rather there is a clear disagreement about the cost of regulation and the effectiveness of enforcement. Proponents believe that uniform rules can contribute to greater transparency, consumer protection and market stability; critics fear that the European market entry threshold is rising and that small companies and innovative projects will be pushed out earlier.