MiCA takes effect, European crypto industry faces a "major reshuffle": high regulatory thresholds may trigger a new wave of M&A

Odaily Odaily reports that the race for the EU's Markets in Crypto-Assets Regulation (MiCA) is coming to an end, but the real challenges for companies are just beginning. The high cost of maintaining ongoing compliance systems may reshape the European crypto landscape. The future competitive focus in the industry is likely to shift from "who can obtain a license" to "who can afford the regulatory costs," driving companies towards scaling through mergers and acquisitions, joint ventures, or partnerships with banks. As MiCA is gradually implemented and the UK's crypto regulatory framework takes shape, the European crypto industry is entering a new phase of consolidation. Insiders believe that high-standard regulatory requirements could fuel a new wave of M&A, and cooperation between crypto-native companies and traditional financial institutions will deepen further.

This trend may be even more pronounced in the UK market. The Financial Conduct Authority (FCA) is developing a new regulatory framework for crypto assets, which is expected to bring crypto businesses under the existing financial services regulatory system, subjecting them to capital, operational, and customer asset protection requirements similar to those for traditional investment firms. Steven Lightstone, a partner at Morgan Lewis in London and co-head of the global fintech team, stated that while the FCA aims to promote market competition and support new entrants, its regulatory standards will be very strict when it comes to consumer protection. Unlike the EU's standalone MiCA framework, the UK's approach will directly leverage the existing financial regulatory system to manage crypto firms.

Meanwhile, increased regulatory certainty is accelerating the entry of European banks into the digital asset space. Simon Schneider, CEO of Sygnum Europe, noted that currently fewer than 20% of banks in Europe offer crypto-related services, indicating a significant market gap. The greatest value of MiCA is not just creating a new licensing system but providing legal certainty for financial institutions to enter the digital asset market. Citing Switzerland as an example, he pointed out that after the introduction of distributed ledger technology regulations, most major Swiss banks have begun offering digital asset services, a path that other parts of Europe may follow in the future. Banks are unlikely to replace crypto-native companies altogether; instead, they are more likely to rely on specialized infrastructure providers and collaborate in areas such as custody, brokerage, staking, and asset tokenization.

As companies that fail to secure MiCA licenses gradually exit the European market, assets may become further concentrated among regulated entities. However, Schneider believes that self-custody models and institutional custody models will continue to coexist for the long term.

Industry insiders suggest that the European crypto industry is entering a "regulatory-driven consolidation cycle." For crypto startups that previously thrived on rapid innovation and asset-light models, future core competitiveness may no longer be solely about technological speed, but rather compliance capabilities, capital scale, and the ability to integrate financial infrastructure. (CoinDesk)