MiCA Takes Effect as European Crypto Industry Faces "Major Shake-up": High Regulatory Thresholds May Spark a New Wave of Mergers

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

This trend may be even more pronounced in the UK market. The UK's Financial Conduct Authority (FCA) is developing a new regulatory framework for cryptoassets, which is expected to bring crypto businesses under the existing financial services regulatory system. This would subject them to capital, operational, and client asset protection requirements similar to those faced by traditional investment institutions. Steven Lightstone, a London-based partner and global co-head of the Fintech practice at Morgan Lewis, stated that while the FCA wants to promote market competition and support new entrants, its regulatory standards will be very strict in areas related 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.

At the same time, increased regulatory clarity is driving European banks to accelerate their entry into the digital asset space. Simon Schneider, CEO of Sygnum Europe, noted that currently less than 20% of banks in Europe offer crypto-related services, leaving a significant market gap. The greatest value of MiCA is not merely 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 following the introduction of Distributed Ledger Technology (DLT) regulations, most major Swiss banks have begun offering digital asset services, and other parts of Europe may replicate this path in the future. He believes that banks will not necessarily replace crypto-native firms, but are more likely to rely on specialized infrastructure providers for cooperation in areas such as custody, brokerage, staking, and asset tokenization.

As firms that fail to secure a MiCA license gradually exit the European market, assets may further concentrate among regulated entities. However, Schneider believes that self-custody models and institutional custody models will coexist for the long term.

Industry observers believe that the European crypto industry is entering a "regulatory-driven consolidation cycle." For crypto startups that have relied 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)