The entry into force of the MiCA Regulation in the EU market, which regulates crypto asset markets and related services provided by crypto asset service providers, has raised questions about future prospects for blockchain, crypto assets including cryptocurrencies, and the broader market known collectively as Web 3.0. Globally and in the medium term, the European crypto market will undoubtedly be affected by the newly announced policy of US President Donald Trump regarding digital assets, and even the idea of creating reserves in digital currencies. It is also reasonable to assume that Asian markets will not remain on the sidelines and will attempt to adapt to emerging trends in the global crypto space.
The adoption of the Crypto Assets Regulation by the European Parliament, as part of the broader framework designed by the European Banking Authority and the European Securities Markets Authority, marked a critical shift toward a unified legal framework. These new rules encompass a wide array of topics—from requirements outlined in crypto asset white papers, token issuance processes, and standards for handling algorithmic stablecoins, to stringent obligations preventing market abuse, managing conflicts of interest, and ensuring the consistent handling of sensitive inside information. Despite this broad regulatory reach, the effectiveness of the measures in achieving genuine market stability and supporting innovation in the EU remains to be seen.
MiCA and Web3: Dawn of a New Era or a Warning Signal?
Discussions about the potential impact of the MiCA Regulation on crypto asset markets have lasted for more than two years. However, only after its adoption and entry into force has it become possible to initially assess the effects of the combination of legal norms and regulatory framework practices of financial authorities on cryptocurrency markets and blockchain startups.
An initial analysis of the impact of the MiCA Regulation on Europe’s crypto asset markets and services has shown that by the middle of this year, three-quarters of European VASPs (Virtual Asset Service Providers) could lose their registration status. Licensing costs and efforts to ensure compliance with the new requirements will increase several times over. Additionally, venture funding volumes for crypto projects are decreasing. As a result, many startups will close or relocate to other countries with more favorable legislation. The blockchain and crypto asset services job market will significantly contract. University graduates will be forced to seek more favorable markets, contributing to brain drain from Europe. Europe risks widening the gap further behind markets with transparent crypto regulation and developed infrastructure.
MiCA Regulation: Analysis, Forecasts, and Implications
The European Union‘s Regulation on Markets in Crypto Assets, known as MiCA Regulation, became fully effective on December 30, 2024. The regulation was adopted on May 31, 2023, and entered into force on June 29, 2023, with its main provisions applied in stages. Starting from June 30, 2024, rules concerning asset referenced tokens (ARTs) and e money tokens (EMTs) took effect. As of December 30, 2024, the MiCA Regulation became fully applicable to all other crypto assets and crypto asset service providers (CASPs).
Post-Enactment: Europe’s Crypto Market Through Analytical Insights
The months following the full application of the MiCA Regulation in Europe—specifically within EU market countries—have allowed for an initial evaluation of this regulatory framework’s impact on crypto assets and related crypto asset services markets. This assessment can now be compared with the forecasts and assumptions made during the regulation’s discussion and adoption phases. The latest analytical report on the status and prospects of the European crypto market for digital assets and cryptocurrencies has been published on the Coincub platform, which specializes in analytics related to Bitcoin and Web3.
Numbers, Opinions, Conclusions: An Overview of the EU Crypto Market
The report analyzes Europe’s crypto market environment from 2022 to 2025, based on quantitative data—including the dynamics of licensed crypto companies, investment flows, and job vacancies—as well as qualitative assessments and conclusions from company executives and startup founders regarding trends emerging in crypto asset markets. In particular, it examines the regulation of crypto-companies (VASPs), financial expenditures to ensure compliance with licensing requirements, and challenges with banking accounts. The analysis also focuses on data concerning cryptocurrency ownership among the population and blockchain-related education.
The report’s authors highlight varying interpretations of terminology adopted in member states and rapid changes occurring in the global crypto market. Additionally, within the EU market itself, significant national differences exist in regulatory framework approaches. The conclusions reached by analysts indicate that European crypto asset markets will contract, Asian and Latin American markets will remain fragmented, while the U.S. market will continue to grow despite high volatility in circulating cryptocurrencies. The advantage of the European market will be its harmonised European regulatory framework.
European Central Bank (ECB) Position on MiCA
The EU’s Markets in Crypto Assets (MiCA Regulation) of the European Commission’s Digital Finance Strategy is one of the key regulatory framework structures aimed at standardizing crypto regulation across all 27 EU member states. MiCA aims to establish a harmonised European regulatory framework for digital assets, eliminate fragmentation caused by differing national applicable laws, and ensure consumer protection and financial stability.
ECB Skepticism and Its Impact on Startups
MiCA Regulation provides a comprehensive regulatory framework prescribing minimum standards for Crypto Asset Service Providers (CASPs) such as exchange, wallet, and other crypto asset services licensing procedures. It also has stringent prudential requirements ensuring transparency and sufficient backing reserves for stablecoin issuers such as asset referenced tokens (ARTs) and e money tokens (EMTs). Moreover, MiCA contains provisions for preventing insider dealing, market manipulation, and other abuses of crypto asset markets, thus safeguarding market integrity. Additionally, the Regulation lays down consumer protection requirements, including public disclosure, security access protocols, and risk management procedures to be complied with by CASPs.
The European Central Bank (ECB) has encouraged strict rules for stablecoins to safeguard monetary sovereignty. The actual application of MiCA at the level of single EU member states is the responsibility of national competent authorities, such as Estonia’s Financial Supervision Authority (Finantsinspektsioon). Blockchain and local crypto market entrepreneurs emphasize that the primary challenge under this unified harmonised European regulatory framework is to maintain Europe’s competitiveness as a blockchain innovation hub.
Banking Barriers: Crypto Not Welcome
MiCA Regulation provides regulatory clarity to Europe’s crypto market ecosystem. However, it hardly addresses significant issues such as job creation, financial services innovation, or retaining blockchain talent graduating from European universities. While initially thought to be a step toward regulatory clarity for digital assets, MiCA in practice laid down strict rules and high compliance burdens on businesses, rendering it extremely challenging for them to ensure compliance with the new standards.
Currently, the European Central Bank is equally wary of employing cryptocurrencies. The ECB consistently prioritizes maintaining financial stability and consumer protection, requesting national central banks to remain cautious regarding crypto assets. Analysis conducted by the Coincub platform shows that such a policy has actually resulted in pressure on commercial banks, which cap or outright refuse banking services to crypto companies in a bid to contain systemic risk. Yet, this model has forced reputable crypto businesses into the periphery of the financial system, where they face difficulties in engaging with the established banking infrastructure and meeting the new requirements imposed by MiCA.
To resolve these challenges, EU policymakers must clearly define the applicability of existing financial services legislation and ensure that mica provisions integrate seamlessly with established rules governing financial markets, financial products, and financial instruments. Additionally, the development of targeted measures relating to certain crypto asset services could provide much-needed flexibility, particularly for innovative projects. Offering clearer guidance on aspects such as digital representation, recognizing the validity of crypto assets stored electronically, and aligning MiCA closely with broader financial regulation would significantly reduce operational uncertainty. Without these steps, Europe risks further alienating its promising blockchain startups and driving innovation elsewhere.
Debanking and IBAN-related issues
Another significant challenge facing crypto companies in the EU is the opening of bank accounts. Due to the risk-averse policy of the European Central Bank (ECB), several commercial banks have declared de facto bans or significantly raised charges on accounts involving crypto assets. As per a study, many startups are unable to pay their employees in time, receive revenues, or conduct routine financial operations. Even if an individual successfully opens an account, a second issue arises—IBAN-based discrimination. Companies repeatedly indicate that counterparties reject payments from foreign IBANs due to concerns over potential anti money laundering (AML) compliance and financial crime risks.
Crypto Businesses Under Banking Blockade
In the U.S., a similar situation, termed “Choke Point 2.0,” involves coordinated regulatory actions aimed at blocking financial access for entire industries. In the U.S., Congress has already begun investigating the debanking problem. In Europe, however, this issue remains somewhat taboo, rarely discussed openly, with virtually no public data demonstrating the scale of problems faced by ordinary crypto companies.
The first public mention of this issue recently appeared in the UK’s “Startup Coalition Report 2025,” titled “Don’t bank on it.” The report explicitly mentions several banks, including international institutions such as AIB (Allied Irish Banks), Bank of Ireland, and Santander, which either severely restrict or completely deny banking services to cryptocurrency companies. According to the report, major banks have refused bank account services to 50% of fintech and crypto firms, or later closed previously opened accounts. Only 14% of companies successfully opened accounts and avoided subsequent closures.
Banks frequently terminate account services abruptly, without providing detailed explanations. Routine payments and transactions can suddenly trigger anti money laundering (AML) and financial crime compliance checks, causing delays or denials. Additionally, banks set unjustifiably high fees for crypto asset transactions while simultaneously restricting daily or monthly transfer limits to minimal levels. In contrast, the U.S. has already introduced legislative initiatives aimed at combating such debanking practices against crypto companies and other industries. Thus, the European crypto market, which once acted as an engine of growth, is now burdened by MiCA Regulation requirements and the blockage of bank accounts. As these barriers intensify, the number of licensed crypto asset service providers (CASPs) in Europe decreases, Europeans’ access to legitimate crypto asset markets shrinks, and there is a general decline in employment opportunities within the cryptocurrency and blockchain sectors.
To effectively address this situation, regulators must urgently clarify the role of existing financial services legislation, including how traditional financial instruments and financial entities regulations apply specifically to the crypto sector. A robust dialogue, perhaps initiated through a new consultation package, should address barriers such as IBAN discrimination, ensuring that crypto firms can reliably continue operations and ensure continuity of financial transactions. Additionally, EU-wide standards for combating money laundering, coupled with clearer criteria on granting banking services (granted or refused), would create a fairer environment for legitimate crypto businesses, fostering the recovery and stabilization of Europe’s digital asset sector.
ESMA’s Position on Crypto Assets
In April 2025, European Securities and Markets Authority’s leadership once again issued stern warnings regarding crypto assets, despite the entry into force of the MiCA Regulation. According to Executive Director Natasha Cazenave, even after the launch of the new regulatory framework, cryptocurrencies remain speculative and highly unstable. The regulator emphasizes that MiCA does not eliminate critical threats—from volatility to a lack of genuine consumer protection. ESMA effectively acknowledges that crypto regulation is failing to keep pace with crypto market dynamics, with the price crash in early 2025 further intensifying regulators’ concerns about potential risks and associated risks in the industry.
ESMA Increases Pressure: MiCA is Not the Limit
Although ESMA actively participates in MiCA Regulation’s implementation and advocates for the creation of a pan-European registry of licensed crypto companies, in practice, the agency focuses more on restraining rather than fostering industry development. The regulator demands full application, increased oversight, and actual physical presence of crypto asset service providers (CASPs) within the EU, simultaneously criticizing business efforts to exploit legal loopholes such as “reverse solicitation.” Consequently, new entrants face barriers even before entering the EU market, and international trading platforms face threats of blockage without clear rules or transparent procedures.
Suppression or Regulation? ESMA’s Role Under Scrutiny
Despite its declared goal of investor protection, ESMA’s measures are often perceived as excessive and ill-timed. The agency restricts the circulation of popular stablecoins and imposes cumbersome transparency and personnel qualification requirements, without offering adaptive mechanisms or incentives for innovation. Critics increasingly point out that under the guise of stability and oversight, ESMA is creating a toxic environment for crypto business growth in Europe.
Moreover, ESMA’s increasing emphasis on mica enforcement through the development of detailed regulatory technical standards and implementing technical standards indicates that even stricter oversight might be on the horizon. The agency has already initiated a new consultation package discussing measures relating to certain crypto asset services, including additional restrictions on public offers, controls over financial instruments, and tighter rules governing interactions with certain financial entities. Without providing pathways to ensure continuity and incentives to continue operations, such an approach may further isolate Europe’s crypto industry and hinder the development of innovative projects operating on underlying technology, placing additional burdens on companies attempting to navigate the rapidly evolving landscape of digital finance.
Licensing Concerns
Ever since the introduction of the MiCA Regulation, the licensing process for crypto asset service providers (CASPs) now takes six months or more, three times the previous timeline. The reason for this is increased regulatory framework scrutiny and bureaucratic delays. For the majority of crypto companies, expenses related to hiring professional lawyers and auditors to ensure compliance with MiCA’s new requirements and anti money laundering (AML) procedures have become enormous, leaving companies no other option but to close shop or pursue mergers and acquisitions (M&A). Before MiCA, a crypto startup could register in a low-expense EU market (e.g., Poland), meeting minimal AML requirements at a maximum outlay of €10,000. After the full application of MiCA in December 2024, these licensing and compliance costs rose dramatically, some far exceeding €60,000.
Compliance Costs: Crypto Startups Struggle
By the end of 2024, Europe had over 3,167 crypto asset service providers (CASPs, VASP, DASP) with over 1,200 new crypto companies registered in just the previous two years. Those companies provided all types of crypto asset services—from crypto wallets to full trading platforms—and were registered under diverse national applicable laws across the EU market.
Prior to the MiCA Regulation, European VASPs were concentrated in low-cost, low-requirement member states. Poland was the leader with over 1,400 registered VASPs, offering inexpensive licensing and simplified procedures to ensure compliance. Lithuania was in second place with over 530 VASPs, attracting businesses through crypto-friendly regulations. Countries with more rigorous prudential requirements—such as Italy (150), Spain (106), and France (104)—had significantly fewer providers. In countries with particularly strict rules—such as Germany (11), Austria (12), and Belgium (8)—the number of licensed providers was minimal.
Regulatory Filtering: EU Crypto Market Shrinks
This regulatory framework fragmentation pushed crypto companies to obtain separate licenses in each of the 27 EU market countries, imposing undue cost and complexity on cross-border business. Only 12 crypto asset service providers (CASPs) and 10 e money tokens (EMTs) issuers had been licensed under MiCA Regulation as of early 2025. Projections suggest the number will rise to approximately 100–130 authorized companies by the end of the year, demonstrating the slow pace of adaptation to new requirements and challenges faced to ensure compliance with MiCA.
Strategic Decision: Adapt or Exit
The MiCA Regulation imposes significant financial and regulatory burdens on existing European crypto asset service providers (CASPs), forcing them to radically alter their business models to ensure compliance with the new requirements. During the transitional period, companies face a strategic choice: either obtain a MiCA license (and achieve CASP status) or seek alternative paths. This issue is further complicated by national legislation required for the full application of MiCA. In Poland, for instance, these regulations are awaited, and as a result, companies are currently unable to file applications since there is no competent authority to entertain them. This negatively impacts notification and passporting rights under MiCA, thus delaying the evolution of markets in affected countries.
On the other hand, it could be argued that costs have decreased for larger players, as previously companies had to individually register in each of the member states to access each new market. With MiCA in place, a single CASP license in one EU country now grants access to the entire EU market. Despite this potential advantage, significant challenges remain for businesses: as of March 2025, only 12 cryptocurrency trading platforms have successfully obtained licenses within the EU. Businesses able to navigate this process will be rewarded with access to a unified crypto market of 448 million people. The EU is the first region globally to implement a single regulatory framework for cryptocurrencies. Even in the United States, despite a federal crypto license, firms still need separate licenses in each state, making the process costly and time-consuming.
Web3 Decline: Investor Interest Wanes
Although the crypto market is energized by the growing popularity of Bitcoin and the expansion of merchant services throughout Europe, industry research indicates that many European tech startups are already making plans to relocate to other countries. Those crypto companies remaining in the EU market struggle to obtain venture capital to grow and scale, as investors perceive the new regulatory framework and associated prudential requirements as forces that increase potential risks, diminish returns, and impose substantial barriers to crypto asset services innovation.
To reverse this trend, it is crucial for the EU to consider the introduction of optional transitional measures, which could provide flexibility for startups facing substantial financial products and compliance burdens. Clear guidance is needed on issues like crypto transactions, acceptable forms of digital representation, financial markets participation, and the application of existing financial entities regulations. Furthermore, the EU must clarify its stance regarding stored electronically digital assets, define procedures for companies with multiple licenses, and set a reasonable approach toward the use of unique identifiers and utility tokens. Without these adjustments, the current new regime risks solidifying Europe’s reputation as an overly restrictive environment, stifling innovation within the broader crypto industry and further eroding investor confidence.
Conclusion
The introduction of the MiCA Regulation represents the EU’s most significant step toward establishing a unified regulatory framework for crypto assets. However, the initial months of its implementation demonstrate that the costs to the crypto market have been higher than anticipated. Instead of accelerating the development of Web3 in Europe, the opposite effect is evident: increased bureaucratic burdens, stricter prudential requirements, more difficult access to banking services, and a reduction in the number of active crypto companies and licensed crypto asset service providers (CASPs). Amid global crypto competition, this puts Europe in a vulnerable position, pushing startups to relocate to other countries.
While MiCA provided regulatory clarity, it has not removed critical infrastructural, investment, or financial services barriers. Without parallel support for innovation, easing administrative measures, and reviewing banking policies, Europe risks becoming not a leader in digital finance but the region with the highest regulatory constraints. To maintain competitiveness, the EU market needs to rethink not only its regulatory objectives but also how they are practically implemented.
Moreover, despite clear intentions to promote convergence and ensure the consistent handling of crypto regulation, the actual implementation across the EU has shown significant changes in the interpretation of certain aspects of MiCA provisions by national authorities. Differences in the approach taken by relevant national competent authorities have complicated the mica authorisation process, resulting in uncertainty for crypto businesses attempting to obtain licenses. Without true harmonization and practical supervisory convergence, companies face additional costs associated with navigating differing local interpretations of MiCA requirements.
Ultimately, Europe’s ambitious move toward establishing uniform EU market rules is incomplete without addressing crucial areas such as operational resilience, clearly defining procedures for crypto asset issuance, and supporting innovation in fields involving distributed ledger technology and non fungible tokens. To genuinely foster growth and maintain a competitive position in the global crypto landscape, the European Union must swiftly engage in ongoing consultations with industry stakeholders, refine its regulatory approach, and offer clearer guidance for emerging technologies within the evolving crypto world.
