Peter Curk is the CEO of ICONOMI
The European Union’s (EU) introduction Markets in Crypto-Assets (MiCA) regulation is probably the greatest shake-up the industry has experienced in its 17-year history. While most people agree that regulation of the crypto sector is long overdue, not everyone is comfortable with the approach that MiCA has taken. So, with criticism rife, and fears growing for the future of the EU’s crypto space, could now be the time for the UK to make a play for a stronger cryptocurrency position?
What’s going wrong with MiCA?
It’s almost two years now, since the MiCA regulations came into force on June 29, 2023. Although it was a phased introduction, with some elements, such as provisions on asset-referenced tokens, not being introduced until June 30, 2024, and others related to crypto-asset service providers (CASPs) being delayed until December 2024, we’ve all had time to get used to the measures. And yet many within the industry remain highly critical. There have been multiple problems with the regulation identified, raising concerns about five core elements.
Stablecoins
Stablecoins have been widely considered to be among the most volatile crypto assets, more or less since inception. And yet, they are not covered by the MiCA regulations. As Stablecoins hold significant potential to damage not just the crypto markets but the wider financial system when unstable, this can only be viewed as an error. And it calls into question the viability of MiCA as a concept.
Industry development
The crypto space has always been characterised by its innovation. An innovation which not only feeds growth within the crypto markets, but within the wider financial system. There is significant concern that the stringency of MiCA’s high-level requirements will smother the innovation that feeds the sector. It not only prices the smaller and emerging businesses out of the market – it’s already too expensive for new crypto businesses to launch in the EU – but because MiCA is built upon the framework of traditional financial regulation, it makes finding creative new approaches difficult for established crypto asset businesses. Which could lead to a degree of stagnation within the industry, which will have ramifications for the wider financial ecosystem.
Open to abuse
Although MiCA is viewed as being too watertight in some respects, there are other concerns regarding its future permeability. Because while innovation may be stifled in the EU’s crypto space, other markets will continue to evolve, and those developments will eventually be carried over into the EU. And many people believe that MiCA does not have the facility to protect investors against future bad actors. This leaves the regulation entirely open to future abuse.
Consumers will pay
For many, this is a slightly lesser concern, but where new regulation brings in fees, fines, and other compliance costs, someone has to foot the bill. And in all likelihood, it’s going to be the end-user – the investors, albeit indirectly. This may result in both new and existing investors turning to overseas territories instead of investing at home.
Regulatory technical standards
Lastly, MiCA’s regulatory technical standards (RTS) weren’t published until more than 18 months after the bill’s introduction. This has caused no end of uncertainty and confusion within the sector. It’s too late to remedy at this stage, but it’s certainly a lesson that other territories can learn from.
So, how could all of this benefit the UK?
How the UK could learn from MiCA
The Financial Conduct Authority (FCA) is already in the process of developing a comprehensive regulatory framework for cryptoassets in the UK. The aim is to implement the new regulations in 2026. MiCA has provided a starting point, which the UK can use to create something better. If the FCA can create a crypto regulatory system that protects investors while supporting innovation and growth, and providing the flexibility to futureproof against new developments, it could be the beginning of world-standard regulation, which will increase the UK’s standing in the global crypto market. However, it can’t overlook the risks posed by stablecoins and other associated crypto assets.
How the UK could benefit from MiCA
The UK has always been a small fish in the vast cryptocurrency sea. By the end of last year, there were only around 40 registered crypto businesses in the UK. This compares to 4,852 in America and more than 2,000 in the EU. Our influence is minimal. But with MiCA driving investors and businesses away from the EU, the UK could potentially access a whole new market. If we take my business, for example. We’re based in the UK and Netherlands, but because we have the ability to passport the license in other EU member states, we’ve been able to attract customers from other territories. Since the introduction of MiCA, we’ve begun to see an inflow of new investors from the EU. I’m sure we’re not the only business to have done so. This is a remarkable opportunity for UK businesses to scale to attract crypto investors unwilling to invest in their home territories during a time of uncertainty.
MiCA was always going to attract criticism. It’s the first of its kind. And although crypto regulation is undeniably necessary in a space riddled with fraud and lacking transparency, there was always going to be kickback against the first regulatory attempt. However, mistakes have still been made. And that means that opportunity is waiting for the UK – not just to bring in new customers, but to find ways to do it better.
Peter Curk is the CEO of ICONOMI, a leading platform in digital asset management. With a background in finance and blockchain, Peter is passionate about making crypto investing accessible and easy for everyone. Under his leadership, ICONOMI has grown into a trusted name in the industry, offering innovative solutions for individuals and institutions alike.
